US approves AT&T's $49bn deal for DirecTV

AT&T's $49 billion acquisition of satellite broadcaster DirecTV won final regulatory approval Friday, clearing the way for a new powerhouse in broadband and video services.

The US Federal Communications Commission said it approved the plan, announced last year, with conditions drawn up to ensure competition and more deployment of high-speed Internet connections.

Earlier this week, FCC chairman Tom Wheeler said he had circulated an order approving the mega-deal and the Justice Department said it would not block the merger.

The deal merges AT&T, which offers Internet and television in parts of the US and is one of the biggest wireless carriers, with DirecTV's more than 20 million subscribers.

That creates the largest pay TV provider in the US, but also opens up possibilities for other online services and packages.

"This transaction allows us to significantly expand our high-speed Internet service to reach millions more households, which is a perfect complement to our coast-to-coast TV and mobile coverage," AT&T chairman and chief executive Randall Stephenson said, in announcing the completion of the deal.

"We're now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition."

Stephenson added that the deal "is all about giving customers more choices for great video entertainment integrated with mobile and high-speed Internet service,"

He added that "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."

AT&T said it becomes "the largest pay TV provider in the US and the world," with 26 million US customers and 19 million in Latin America, including subscribers of Sky Mexico in which DirecTV holds a stake.

- Conditions included -

The news comes three months after regulators blocked a massive merger plan of cable giants Comcast and Time Warner Cable, claiming it would concentrate too much market power in the market for high-speed Internet.

But merging AT&T and DirecTV could help competition because the telecom giant and satellite broadcaster do not have the same geographical territories as the traditional cable firms.

The conditions include a "buildout" of high-speed Internet to an additional 12.5 million customers, and the merged company will be required to offer discounted services for low-income consumers.

The FCC also will bar the combined firm from discriminating against rival video firms such as Netflix and Hulu and abid by other aspects of the FCC's "Open Internet" rules.

The conditions "address potential harms presented by the combination" and "also ensure that the benefits of the merger will be realized," the FCC statement said.

The Justice Department said this week its review found the plan "does not pose a significant risk to competition."

Consumer organizations had mostly opposed the deal, arguing the huge tie-ups could lead to higher prices and degraded service.

Earlier this week, John Bergmayer at the consumer activist group Public Knowledge welcomed the FCC's conditions but said "no one should imagine that this has solved the underlying problem of our lack of competition."

The deal comes amid a growing migration of consumers to Internet-based television services like Netflix and Hulu, with some losses in traditional cable and other pay TV subscriptions.

Though the number of cable "cord cutters" has been relatively modest in recent years, analysts expect this trend to accelerate, which could have a major impact on the television industry.