Microsoft urges FCC to approve AT&T DirecTV bid

Microsoft has written to the US Federal Communications Commission (FCC) urging for its approval of AT&T’s bid for US and Latin American pay TV provider DirecTV.

Meanwhile, several of AT&T’s former partners, some 90+ members of the Minority Cellular Partners Coalition (MCPC), have sent a petition to the FCC asking the authority to block the transaction, accusing the carrier of anti-competitive tactics, violating fiduciary duty and harming business partners.

In the published letter, to which the FCC is expected to respond by16 October, as reported by Reuters, Microsoft argues that AT&T’s take-over of DirecTV is vital in increasing US citizens’ access to the internet. As part of seeking regulatory approval and in order to convince the FCC the bid is in the public interest, AT&T has promised to expand its coverage to 13 million additional rural customers if the deal goes through.

But the 18-page MCPC petition claims the acquisition would result in a raw deal to pay TV customers, as competition in the already greatly consolidated market would be reduced: “as this petition will show, among other harms, this merger would substantially lessen competition in the video marketplace. In order to find that a merger is in the public interest, the Commission must be convinced that it will enhance competition. This merger fails this test….The Commission must block it.”

From AT&T’s point of view, the $48.5 billion merger would bring a number of benefits, including great increases in video revenues and its fixed broadband network locations. Increase to non-US revenue is also a significant factor, especially since the market growth opportunities in Latin America, where pay TV has not reached the same subscriber levels as in the US, are much higher.

The US media and communications industry has recently seen a number of take-overs including AT&T’s purchase of pre-paid carrier Leap Wireless, Sinclair Broadcast Group’s acquisitions of eight TV stations from Allbritton, Gannett’s 23-TV station purchase from Belo and Tribune’s buyout of Local TV and its 16 stations.

AT&T first announced plans to acquire DirecTV in May 2014, and the deal is expected to take year in total to complete. The FCC and the US Justice Department, whose approval is also needed for the take-over to be finalised, must evaluate the purchase in a complicated marketplace, which has seen a lot of concentration in recent years. On the other hand, if the proposed acquisition of Time Warner Cable by Comcast Corp is approved, then the AT&T – DirecTV merger would make a good competitor against the former.