AT&T creates mobile and video giant after sealing DirecTV deal

Shortly after winning FCC approval, AT&T closes its deal to buy the satellite TV provider. DirecTV's video relationships could become key as more content is delivered on mobile devices.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read

AT&T is now the largest paid-television provider in the country.

The FCC has imposed several conditions on AT&T's acquisition of DirecTV. AT&T

The Dallas telecommunications giant confirmed Friday that it has closed its acquisition of satellite television provider DirecTV for $49 billion.

Combining AT&T's broadband and wireless services with DirecTV's nationwide satellite TV service will create a powerhouse of broadband, entertainment and communications services. AT&T gets access to DirecTV's content deals, such as its package of National Football League games, as well as the ability to deliver those services to everyone across the country. (AT&T only offers its video service to a few states.) DirecTV's video relationships could become key as more content is delivered on mobile devices.

"We're now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition," AT&T CEO Randall Stephenson said in a statement.

The closing of the deal came shortly after the Federal Communications Commission announced Friday that the five-member commission had voted to approve the merger. The Department of Justice also said this week that it would not stop the merger. While both federal agencies had some concerns about the second-largest wireless company buying DirecTV, the concerns were not strong enough to oppose the deal. To mitigate concerns, the FCC imposed several conditions on the merger.

Specifically, AT&T agreed to abide by stricter Net neutrality restrictions than is spelled out in rules the agency passed in February, which are meant to ensure all traffic on the Internet is treated equally. AT&T also agreed to increase the number of customers it plans to serve with its high-speed gigabit broadband service. And it made promises to better serve low-income families and schools and libraries with better broadband access.

The acquisition comes as AT&T looks for ways to diversify its business amid tough competition from wireless competitors in the US as well as cable operators in the broadband and paid-TV markets. The company has gone on a buying spree over the past year as it tries to expand its business into new markets and across borders. Earlier this year it completed the $2.5 billion acquisition of Mexican wireless provider Iusacell and the $1.88 billion acquisition of mobile operator Nextel Mexico.

The Department of Justice, which examines potential antitrust concerns, said earlier this week it approved of the deal. FCC Chairman Tom Wheeler also confirmed in a blog post earlier this week that he was recommending the deal be approved. The vote by the whole commission announced Friday makes the FCC's approval official.

Though the FCC has scrutinized other deals in the communications and media sector, experts had expected regulators to approve the merger. Earlier this year, the FCC and Department of Justice rejected Comcast's $45 billion bid to buy fellow cable operator Time Warner Cable. In 2011, the FCC and Justice Department opposed AT&T buying wireless rival T-Mobile.