The Federal Communications Commission has approved AT&T's acquisition of DirecTV for a whopping $49 billion, making AT&T the largest paid television service provider in the U.S.
Between AT&T's wireless services and DirecTV's huge satellite TV service, the result will be a powerhouse in the communications and entertainment industry that could radically change the television landscape. The FCC approval was the final step in AT&T's 14-month long journey to acquire DirecTV.
"Combining DIRECTV with AT&T is all about giving customers more choices for great video entertainment integrated with mobile and high-speed Internet service," said AT&T CEO Randall Stephenson in a statement. "We'll now be able to meet consumers' future entertainment preferences, whether they want traditional TV service with premier programming, their favorite content on a mobile device, or video streamed over the Internet to any screen."
Following the acquisition, AT&T announced that John Stankey would be given the title of chief executive of AT&T's new AT&T Entertainment & Internet Services. He will oversee operations involving DirecTV and AT&T Home Solutions.
The FCC has been reviewing the proposed acquisition for almost a year, coming up with a number of requirements for AT&T to fulfill in the acquisition. For example, the company will be required to expand its high-speed Internet access to as many as 12.5 million customer locations. It will also have to better serve low-income families, public schools and libraries.
The FCC recently released a study that said that one-third of schools in the U.S. lacked adequate Internet access. Reducing that percentage is a priority for the FCC.
Last but not least, AT&T agreed to abide by the strict net neutrality rules voted in by the FCC in February, aimed at ensuring that all Internet traffic is treated equally.
AT&T has long been looking for ways to diversify its business, with competition from other U.S. wireless companies having increased over the past few years. To combat this competition, the company has made a number of high-profile purchases, including the acquisition of Mexican wireless provider Iusacell for $2.5 billion. This merger will help AT&T be a lot less dependent on its wireless phone business. The DirecTV acquisition will also give AT&T more reach in the Latin American market, with DirecTV having ownership interests in a number of satellite companies that serve countries like Mexico, Brazil and Argentina.
The approval of the deal comes shortly after the FCC said that it would block Comcast's proposed acquisition of Time Warner Cable, a deal that many suggested would give Comcast a monopoly in the broadband industry.
