AT&T has announced that they and DirecTV have entered into an agreement that would see the former swallowing up the latter for an insane $48.5 billion. The deal has already been unanimously approved by shareholders and board members on both sides of the table, so all that’s left is to convince the justice department that this won’t hamper competition in the United States.
The writing has long been on the wall for DirecTV being swept off its feet by a conglomerate like AT&T, so it’s hardly surprising that the deal has finally been put onto the table. So what are both sides hoping to get out of the deal? More business, really.
For AT&T, they’d be able to deliver broadband internet access to 15 million more consumers, mainly those who live in more rural areas. AT&T will also obviously get access to DirecTV’s satellite programming business, which includes lucrative exclusive content from the NFL through their Sunday Ticket package.
For DirecTV (and, well, AT&T), they’ll be able to package TV services with a more robust selection of home and mobile phone packages, as well as internet packages that they haven’t quite had access to. They’ve already been partnering with the likes of Verizon, AT&T, MediaCom and more to offer phone and internet bundles to their consumers, but the savings for taking advantage of those bundles don’t usually amount to more than $10.
Here is the full list (as told by AT&T) of what they’re looking to achieve with this deal:
- 5 Million Customer Locations Get More High Speed Broadband Competition. AT&T will use the merger synergies to expand its plans to build and enhance high-speed broadband service to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today, utilizing a combination of technologies including fiber to the premises and fixed wireless local loop capabilities.
- Stand-Alone Broadband. For customers who only want a broadband service and may choose to consume video through an over-the-top (OTT) service like Netflix or Hulu, the combined company will offer stand-alone wireline broadband service at speeds of at least 6 Mbps (where feasible) in areas where AT&T offers wireline IP broadband service today at guaranteed prices for three years after closing.
- Nationwide Package Pricing on DIRECTV. DIRECTV’s TV service will continue to be available on a stand-alone basis at nationwide package prices that are the same for all customers, no matter where they live, for at least three years after closing.
- Net Neutrality Commitment. Continued commitment for three years after closing to the FCC’s Open Internet protections established in 2010, irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules.
- Spectrum Auction. The transaction does not alter AT&T’s plans to meaningfully participate in the FCC’s planned spectrum auctions later this year and in 2015. AT&T intends to bid at least $9 billion in connection with the 2015 incentive auction provided there is sufficient spectrum available in the auction to provide AT&T a viable path to at least a 2×10 MHz nationwide spectrum footprint.
Of course, their desire to snap up DirecTV likely stems from more than just wanting to bundle all these TV, phone and internet packages up and deliver them to more consumers. This is likely their response to Comcast and Time Warner Cable looking to tie the knot (a deal that would otherwise put AT&T at a serious disadvantage).
AT&T will no doubt leverage that rival acquisition to bolster their own argument whenever this deal hits the desks of judges and antitrust regulators. There’s no early indication on what will happen with either of these deals just yet, so both are on pretty even footing in regards to what will eventually be decided.
Between all these acquisitions and the unsettling advancement of the death of net neutrality, the state of television, phone and internet in the United States is definitely under the microscope of every industry pundit, expert and enthusiast out there. The next year and change has the potential to define telecommunications in the country for the next decade or more, so this is all a very big deal, folks. AT&T will be holding a phone press conference this morning to discuss the acquisition, so keep an eye out for any more information that might stem from those proceedings.
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