DirecTV Closer to Approval of Buyout by AT&T

July 22, 2015 by Paul Ausick

Federal Communications Commission (FCC) Chairman Tom Wheeler said Tuesday that an order recommending approval of AT&T Inc.’s (NYSE: T) $49 billion acquisition of DirecTV (NASDAQ: DTV) has been sent to the other four FCC members. A number of conditions are reportedly attached to the recommendation.

According to the FCC, as part of the transaction AT&T plans to divest its interest in América Móvil, a telecommunications company headquartered in Mexico. AT&T has also agreed to expand its fiber-optic broadband service if the deal is approved. The company has also been barred from applying data caps on customers unless it also applies the cap the over-the-top video capability it is acquiring with DirecTV.

AT&T’s wireline footprint covers portions of 22 states, and AT&T has begun to expand its U-verse video and broadband services to reach approximately 75% of the customer locations in that footprint. AT&T currently provides some form of U-verse services to approximately 11.3 million households.

DirecTV is a provider of direct broadcast satellite services, also known as direct-to-home satellite television services. It has approximately 20 million video subscribers in the United States and interests in entities with approximately 18 million video subscribers in Latin America. DirecTV does not offer broadband or voice services of its own but does offer synthetic service bundles of video, voice and broadband services in conjunction with CenturyLink, AT&T and Verizon, among others.

The acquisition of DirecTV gives AT&T scale in the pay-TV business, which it hopes to parlay into boosting its own U-verse broadband video service. The FCC appears to be ready to let the AT&T try its hand at being a pay-TV provider.

AT&T’s stock traded down about 1% Wednesday morning, at $34.23 in a 52-week range of $32.07 to $37.48.

ALSO READ: 5 Telecom and Media Stocks to Own for the Rest of 2015