Today, AT&T officially announced acquisition of satellite TV company DirecTV. With the merger, AT&T becomes the largest pay TV provider in the U.S. with over 26 million customers in the US and more than 191 million customers in Latin America, including Mexico and the Caribbean.
The AT&T/DirecTV deal was announced over a year ago, and in mid-May the merger deadline was extended beyond the termination date.
“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 scree,” said Randall Stephenson, AT&T chairman and CEO.
AT&T answers questions about the acquisition on their website.
AT&T Inc. T, +2.15% has completed its acquisition of DIRECTV. The newly combined company – the largest pay TV provider in the United States and the world – will offer millions of people more choices for video entertainment on any screen from almost anywhere, any time.
“Combining DIRECTV with AT&T is all about giving customers more choices for great video entertainment integrated with mobile and high-speed Internet service,” said Randall Stephenson, AT&T chairman and CEO. “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.”
“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,” Stephenson said. “We’re now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition.”
AT&T now is the largest pay TV provider in the U.S. and the world, providing service to more than 26 million customers in the United States and more than 191 million customers in Latin America, including Mexico and the Caribbean. Additionally, AT&T has more than 132 million wireless subscribers and connections in the U.S. and Mexico; offers 4G LTE mobile coverage to nearly 310 million people in the U.S.; covers 57 million U.S. customer locations with high-speed Internet; and has nearly 16 million subscribers to its high-speed Internet service.
Current customers of AT&T and DIRECTV do not need to do anything as a result of the merger. They’ll continue to receive their same services, channel lineups, and customer care. Customer account information, online access and billing arrangements remain the same. The integration of AT&T and DIRECTV will occur over the coming months. In the coming weeks, AT&T will launch new integrated TV, mobile and high-speed Internet offers that give customers greater value and convenience.
With the completion of its DIRECTV acquisition, AT&T will continue to deploy its all-fiber GigaPower Internet access service – the company’s highest-speed Internet service, which allows you to download a TV show in as little as three seconds. When the expansion is complete, AT&T’s all-fiber broadband footprint will reach more than 14 million customer locations.
AT&T announced that John Stankey will be CEO of AT&T Entertainment & Internet Services, responsible for leading its combined DIRECTV and AT&T Home Solutions operations. Stankey will report to Stephenson. DIRECTV President, Chairman and CEO Mike White announced his plans to retire.
“Mike is one of the world’s top CEOs and a great leader who built DIRECTV into a premier TV and video entertainment company spanning the U.S. and Latin America,” Stephenson said. “He has been a terrific partner and friend, and his legacy will be an important part of our combined company.”
As a result of this transaction, AT&T leads the industry in offering consumers premier content, particularly live sports programming, such as the exclusive rights to NFL SUNDAY TICKET, which gives customers every out-of-market NFL game, every Sunday afternoon, on any screen – TV, mobile devices or PCs. Additionally, the company owns ROOT SPORTS, one of the nation’s premier regional sports networks, and has stakes in The Tennis Channel, MLB Network, NHL Network, and GSN (Game Show Network).
AT&T is also developing unique video offerings for consumers through, among other initiatives, its Otter Media joint venture with The Chernin Group. The joint venture was established to invest in, acquire and launch over-the-top (OTT) video services. This includes its purchase of a majority stake in Fullscreen, a global online media company that works with more than 50,000 content creators who engage 450 million subscribers and generate 4 billion monthly views.
Under the terms of the merger, DIRECTV shareholders received 1.892 shares of AT&T common stock, in addition to $28.50 in cash, per share of DIRECTV. AT&T will provide complete updated 2015 financial guidance at a conference the company will host for financial analysts in the coming weeks. The conference will be webcast to the public.
The DIRECTV acquisition significantly diversifies AT&T’s revenue mix, products, geographies and customer bases. As a result of this acquisition, as well as AT&T’s acquisition of Iusacell and Nextel Mexico, AT&T expects that, by the end of 2015, its largest revenue streams will be, in descending order: Business Solutions (both wireless and wireline); Entertainment & Internet; Consumer Mobility; and International Mobility and Video.
As part of the Federal Communications Commission’s approval of the transaction, AT&T has agreed to the following conditions for the next four years:
Within 4 years, AT&T will offer its all-fiber Internet access service to at least 12.5 million customer locations, such as residences, home offices and very small businesses. Combined with AT&T’s existing high-speed broadband network, at least 25.7 million customer locations will have access to broadband speeds of 45Mbps or higher.
Within its wireline footprint, the company will offer 1Gbps service to any eligible school or library requesting E-rate services, pursuant to applicable rules, within the company’s all-fiber footprint.
Within AT&T’s 21-state wireline footprint, it will offer discounted fixed broadband service to low-income households that qualify for the government’s Supplemental Nutrition Assistance Program. In locations where it’s available, service with speeds of at least 10Mbps will be offered for $10 per month. Elsewhere, 5Mbps service will be offered for $10 per month or, in some locations, 3Mbps service will be offered for $5 per month.
AT&T’s retail terms and conditions for its fixed broadband Internet services will not favor its own online video programming services. AT&T can and will, however, continue to offer discounted integrated bundles of its video and high-speed Internet services.
AT&T must submit to the FCC new interconnection agreements it enters into with peering networks and on-net customers for the exchange of Internet traffic. The company will develop, in conjunction with an independent expert, a methodology for measuring the performance of its Internet traffic exchange and regularly report these metrics to the FCC.
AT&T will appoint a Company Compliance Officer to develop and implement a plan to ensure compliance with these merger conditions. Also, the company will engage an independent, third-party compliance officer to evaluate the plan and its implementation, and submit periodic reports to the FCC.
