The FCC Just Greenlit AT&T and DirecTV's $50 Billion Merger

Consolidation begets consolidation.

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Jul 21 2015, 10:25pm

Image: Todd Wade/Flickr

Update 7/24: As expected, the FCC has officially approved the deal, stating that it has "determined that granting the application, subject to certain conditions, is in the public interest."

AT&T is closing in on its prize: DirecTV's satellite-TV business.

The deal, which has been in the works for over one year, would give AT&T the consumer broadband reach that it craves and bolster DirecTV's terrestrial market position, according to FCC officials.

Such a deal would likely be valued at $50 billion—DirecTV's current market value—and would be another example of the decades-long consolidation of the telecom and cable industries.

The talks were spurred on by Comcast's botched deal to buy Time Warner Cable, which was shut down by regulators.

"An order recommending that the AT&T/DirecTV transaction be approved with conditions has circulated to the Commissioners," FCC Chairman Tom Wheeler said in a statement. "The proposed order outlines a number of conditions that will directly benefit consumers by bringing more competition to the broadband marketplace."

The AT&T-DirectTV merger would radically reshape the TV business at a time of rapid change in the industry, when increasing numbers of consumers are looking for new—so-called "over the top" or OTT—modes of consumption.

DirecTV has the second largest pay-TV subscriber base in the country but lacks a competitive broadband internet offering of its own. AT&T is forging ahead with its own broadband plans but would love to get its hands on DirecTV's satellite-TV business. And AT&T, which is currently worth $185 billion, could certainly afford the deal.

"I oppose these mergers," former FCC Commissioner Michael Copps, who serves as a special adviser to Common Cause's Media and Democracy Initiative, told Motherboard in a phone interview. "It's disappointing that we're back in consolidation mode after the failed Comcast-Time Warner Cable merger."

A FCC spokesperson did not return a request for comment.

"AT&T and DirecTV are bound by the FCC's net neutrality requirements," a source familiar with the process told Motherboard. "There are also strict conditions about how the companies must expand broadband access as part of the deal."

"Consolidation begets consolidation," said Copps.