AT&T's acquisition of DirecTV is likely to receive approval from regulators, creating the largest pay TV company in the US, according to The Wall Street Journal. Both the Justice Department and the FCC are said to be moving toward approval, having found no major issues with the merger. While it doesn't appear that the deal will be blocked, regulators reportedly may choose to put conditions on it, potentially preventing the combined company from abusing its power in the emerging online TV space. The Journal reports that the conditions being considered are viewed as acceptable to AT&T. An official decision may not arrive for several more weeks.
AT&T's commitment to building out rural broadband may help its cause
On the surface, the deal's approval seems to be a marked departure from the language heard from regulators just a few weeks ago when the Comcast–Time Warner Cable merger was called off. Federal Communications Commission chairman called that proposal an "unacceptable risk to competition and innovation."
This merger is something of a different story, however. Rather than creating an internet service juggernaut, the combination of AT&T and DirecTV will instead have a domination in pay TV. That'll allow the combined company to have serious bargaining power when it comes to content licensing. But it'll also allow the company to market its internet and TV services in a stronger way: as a bundle. That may help it to attract and retain customers, potentially encouraging expansion of both services.
That's also a big part of the reason regulators appear to like this merger. AT&T has already committed to "build and enhance" high-speed internet service to 15 million customers, primarily in rural areas, if this deal goes through. These are areas that AT&T largely doesn't serve with high-speed internet right now, and getting faster service out there will help the FCC move closer to its goals of connecting more of rural America and eventually achieving universal access to broadband. It could also increase overall competition. AT&T says that this project would be completed within four years of the merger closing.
Some of the biggest concerns around the AT&T–DirecTV deal have hovered around what it could do to squeeze out online video providers like Netflix. As the largest pay TV company and one of the largest internet providers, the combined company would have the ability to discourage consumers from canceling cable and getting their TV online; it could apply data caps, for example, to make cable look more appealing. Netflix actually told regulators last week that it isn't comfortable with the merger unless changes are made. Given the growth in online TV right now (and the FCC's actions to foster it), it wouldn't be surprising to see conditions that address these concerns be put forward.