AT&T Pitches DirecTV Acquisition to Regulators

5:02 PM PST 06/11/2014 by Paul Bond
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DirecTV CEO Michael White

The companies make the case that the proposed $48.5 billion acquisition is in the best interest of the public and should therefore be approved.

AT&T and DirecTV told regulators that each separate company "cannot provide on its own what consumers increasingly demand: an integrated and efficient bundle of high-speed broadband and high-quality video from a single provider."

The purpose of the admission was to convince regulators that AT&T's proposed $48.5 billion acquisition of DirecTV is in the best interest of the public and should therefore be approved.

Furthermore, according to a document filed with the FCC and made available to reporters on Wednesday, if Comcast is allowed to proceed with its $45.2 billion purchase of Time Warner Cable, AT&T and DirecTV would be at a disadvantage.

DirecTV has no broadband capabilities while AT&T has a video service in only a minority of customer locations, so a combined entity could offer bundled services to more consumers at a lower cost, the two companies argue in their filing.

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"AT&T expects to bring new or enhanced high-speed broadband to at least 15 million customer locations, the majority of which are in rural areas with no or limited broadband service choices," the document says. "Indeed, AT&T is so confident of these savings and other synergies that it is willing to commit to meet this target within four years from the close of this transaction."

AT&T also makes a commitment to "diversity," which was also a large topic of conversation when Comcast acquired NBCUniversal.

"AT&T will extend its best-in-class diversity practices to both DirecTV's employees and suppliers," according to the document. "AT&T also will continue its practice of working responsibly with the unions representing its workforce."

Observers expect that both the AT&T-DirecTV merger and the marriage of Comcast and Time Warner Cable will receive an extraordinary amount of scrutiny from consumer groups and lawmakers before permission is granted for the transactions to close. Some also expect concessions will need to be made as a condition of regulatory approval.

Along those lines, AT&T says in the filing it will continue for three years after the merger closes to offer standalone DirecTV satellite video service and standalone retail broadband at competitive prices. It also commits to adhering to "net neutrality" rules. 

Email: Paul.Bond@THR.com

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