AT&T's DirecTV takeover: all the news from the $48.5 billion deal

AT&T’s effort to build a cable alternative for cord cutters now has a price. AT&T CEO Randall Stephenson said today that DirecTV Now will launch next month for $35 a month with access to more than 100 channels, including channels from Disney and Time Warner. It competes with similar offerings from Sling, whose package starts at $20 a month for fewer channels, and PlayStation Vue, which starts at $40 for around 60 channels.

DirecTV Now was announced in March. It will allow consumers to stream television from smartphones, tablets, smart TVs, set-top boxes, and PCs, among other devices. The complete list of channels that will be available on the service is not yet available. Stephenson said that the service will be aided by AT&T’s budding 5G network, which he argued would eventually be a viable alternative to home broadband service.

The FCC approved AT&T's $48.5 billion takeover of DirecTV just under two weeks ago, and we're already seeing the first results — new bundles that the carrier describes as the "first-ever nationwide package of TV and wireless services." DirecTV packages range from $50 to $125 a month, and AT&T is offering a $10 discount when combined with wireless subscription. For example, the company's $160 plan with 10GB of shareable data and four phone lines would run you $200 if you added the $50 DirecTV Select option.

Continuing the two companies' history of offering TV and internet bundles, you can also add AT&T broadband service to any package from $30-50 a month depending on speed. Existing DirecTV customers may want to take advantage of the company's new ownership, too; AT&T is offering a $300 credit to those who switch from another carrier and trade in their phone for a new one on AT&T Next.

The FCC has approved AT&T's $48.5 billion acquisition of DirecTV, bringing one of the nation's largest wireless carriers together with the largest satellite TV provider. The combined firm will have around 26 million TV subscribers, making it the largest pay TV company in the country. That created some concern for regulators, but apparently not enough to stop the deal. Instead, it's been approved with conditions, including the expansion of the company's high-speed internet program. Additionally, the conditions are meant to ensure that the combined company will still include affordable internet options and give subscribers the option to access rival video services online. The Justice Department said this week that it had closed its investigation of the deal.

In particular, the FCC appears to be interested in the combined company's promise to begin serving new rural customers. When the merger was announced, AT&T said that it would commit to improving high-speed internet access for customers in rural areas. That'll go a long way toward the FCC's goal of making high-speed internet universally accessible across the US, which is likely a big part of why it favors this deal.

AT&T is one step closer to successfully taking over DirecTV. Citing anonymous sources, The Wall Street Journal reported earlier today that FCC chair Tom Wheeler was preparing to circulate a proposal to approve a merger between the two companies, setting the stage for a vote. Executives from both companies met with the agency last month to discuss the terms of the deal, and it's widely expected to pass both FCC and Justice Department review without trouble. There's no word, however, on exactly when the approval might come.

Wheeler issued a statement shortly after the report came to light, in which he confirmed that an order recommending that the merger be approved had been circulated to FCC commissioners. "The proposed order outlines a number of conditions that will directly benefit consumers by bringing more competition to the broadband marketplace," Wheeler wrote. The FCC head said the deal would be in consumer interest, bringing faster, better fiber internet to a huge number of new locations. "If the conditions are approved by my colleagues, 12.5 million customer locations will have access to a competitive high-speed fiber connection. This additional build-out is about 10 times the size of AT&T's current fiber-to-the-premise deployment, increases the entire nation's residential fiber build by more than 40 percent, and more than triples the number of metropolitan areas AT&T has announced plans to serve."

The FCC has asked AT&T for more information about its decision to halt the rollout of its high-speed fiber network until net neutrality rules are decided. It's asking AT&T to provide documents regarding the profitability of fiber deployment, its plans to limit fiber deployment, what its fiber network currently looks like, and how many households it actually planned to deploy fiber to in the first place. AT&T's decision to halt fiber rollout is effectively a threat, telling the FCC that strict net neutrality rules would harm the type of broadband investment that it so wants to see. The commission's inquiry is likely going to size up that threat — and see how this might impact AT&T's investment should its merger with DirecTV go through.

For its part, AT&T claims that the fiber halt is all a matter of being responsible with its money. "You're doing multi-billion-dollar investments and you really have no clarity in terms of how those investments will be regulated," AT&T CEO Randall Stephenson said on Wednesday. "That can have no effect other than to cause one to pause." AT&T first announced its plans to expand its one-gigabit-per-second fiber service back in April, saying then that it was examining upward of 100 locations to roll it out. All of those are now on hold. AT&T also committed to bringing fiber connections to 2 million households if its merger with DirecTV goes through and plans to follow through on that regardless of the FCC's decision.

DirecTV has renewed its deal with the NFL to carry every Sunday afternoon out-of-market game through its Sunday Ticket package. The Washington Post is reporting that the deal is in place for eight years and will net the NFL $1.5 billion annually, though neither company is officially disclosing terms of the agreement. Sealing the deal was critical for DirecTV for a number of reasons, with one prominent one being that the fate of its merger with AT&T in part depended on it — AT&T was allowed to bail on the merger if DirecTV lost the NFL deal.

But it never really looked like DirecTV had any significant chance of losing Sunday Ticket, which is one of the company's biggest draws. The deal also expands DirecTV's ability to stream games to mobile devices, which it began to do as part of Sunday Ticket TV over the summer. But while DirecTV's willingness to begin streaming games online to select locations means that it's slowly becoming easier to watch football games wherever you want to watch them, the fact that DirecTV apparently has this deal locked down for another eight years means that fans will still be subject to its whims. Sunday Ticket is one of the biggest draws that DirecTV has, and as long as it has it, don't expect it to make things too cheap and easy for you.

The Federal Communications Commission is reviewing AT&T's plan to acquire satellite provider DirecTV, and it wants to hear the public's opinions on the matter. As of today, members of the public can submit comments on the proposed purchase or petitions for the FCC to deny the purchase. The purchase would give AT&T control over around 26 million TV subscribers — an enormous figure that would make it second to only the merged Comcast–Time Warner Cable, should that deal also go through.

The FCC's comment period will remain open through September 16th, after which there will be a month-long period during which the public can reply to those comments, ending October 16th, followed by yet another period of replies to those comments. The commenting period ends after that, but it's unstated when the FCC will close its review. To submit a comment, go to the FCC's website and file a response to proceeding number 14-90.

Yesterday's news that AT&T had agreed to acquire DirecTV for a whopping $48.5 billion came as no surprise to observers of the pay-TV industry. "If you think back to the ’90s the marketplace was full of small companies. We've seen wave after wave of mergers and now there are fewer and larger companies," says Jeff Kagan, an independent analyst. "Going forward we're going to see even fewer and even larger competitors going forward or moving toward a national, competitive marketplace for television, telephone, internet, wireless."

For AT&T, the deal is mainly about gaining scale in video and acquiring the bargaining power that comes with that to license premium content — particularly with the looming specter of a tie-up between Comcast and Time Warner Cable. AT&T will combine its 5.7 million U-verse TV customers with DirecTV's roughly 20.3 million US subscribers. "All of a sudden you're talking about the number-two pay-TV provider in the country," says Dan Rayburn, an analyst with Frost & Sullivan. "That means you can negotiate for better programming, and at a better price."

If DirecTV fails to lock up NFL Sunday Ticket beyond this coming season, AT&T has given itself the right to back away from the colossal $48.5 billion acquisition announced yesterday. The out clause contained in the proposal’s fine print shows just how valuable of a property the NFL is. "The parties also have agreed that in the unlikely event that DirecTV’s agreement for the NFL Sunday Ticket service is not renewed substantially on the terms discussed between the parties, AT&T may elect not to consummate the merger," it reads.

The careful wording also says that AT&T won’t be able to collect any damages if this scenario plays out. DirecTV just has to prove that it "used its reasonable best efforts to obtain such renewal." And from the sounds of it, the satellite provider is already trying its best to get the deal done.