Federal Communications Commission DA 21-838
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Applications of AT&T Inc.
(Transferor)
and
DIRECTV Entertainment Holdings LLC
(Transferee)
For Transfer of Control of DIRECTV Enterprises,
LLC
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IBFS Files Nos. SAT-T/C-20210322-00037
SAT-T/C-20210322-00038
SAT-AMD-20210422-00053
SAT-AMD-20210422-00054
SES-T/C-20210322-00546
SES-T/C-20210322-00547
SES-AMD-20210428-00741
SES-AMD-20210428-00742
ULS File No. 0009450204
MEMORANDUM OPINION AND ORDER
Adopted: July 16, 2021 Released: July 16, 2021
By the Chief, International Bureau; Acting Chief, Wireless Telecommunications Bureau:
I. INTRODUCTION
1. In this Order, pursuant to section 310(d) of the Communications Act of 1934, as amended
(the Act), we grant the applications of AT&T Inc. (AT&T) and TPG Capital (TPG), an investment
management firm, (collectively, the Applicants) for consent to the transfer of control of Commission
licenses from AT&T to DIRECTV Entertainment Holdings LLC (New DIRECTV), which will be jointly
managed by the Applicants.
1
As discussed below, AT&T will own 70% of the stock of the new company,
with TPG receiving 30% in exchange for its cash investment of $1.8 billion; TPG will also be able to
appoint four of the nine board members of the new company. Given the recent divestiture of media assets
by TPG, after which it no longer owns any significant interests in video programming or distribution
businesses, and the record established in this proceeding, we find no adverse effect on market
concentration or likely competitive or public interest harms. Rather, the Applicants contend that the
significant new investment will enhance the company’s ability to provide existing and new competitive
services to the public. As discussed below, we find that approving the proposed transaction serves the
public interest.
1
See 47 U.S.C. § 310(d); Applications of AT&T Inc. and TPG Capital for Consent to Transfer Control of Licenses
(filed Mar. 22, 2021, amended Apr. 22, 2021) (Application); see also 47 CFR §§ 1.948, 25.119. Page citations to
the Application refer to the public interest statement submitted as Exhibit A in IBFS File No. SAT-T/C-20210322-
00037.
Federal Communications Commission DA 21-838
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II. BACKGROUND
A. Description of the Applicants
2. AT&T is a global provider in telecommunications, media and entertainment, and
technology.
2
AT&T reports that in 2020, it had almost 5 million fiber broadband connections, over 6
million retail voice connections and served over 180 million wireless subscribers.
3
3. DIRECTV offers direct-to-home satellite digital television services to consumers, and U-
Verse offers video programming over AT&T’s fiber networks. AT&T also offers video programming
through its AT&T TV, and Watch TV products. In total, AT&T reports that in 2020, it delivered
multichannel video programming to more than 127 million subscribers.
4
The Commission licenses that
support the DIRECTV and U-verse TV businesses are held by DIRECTV Enterprises, LLC, a wholly-
owned indirect subsidiary of AT&T.
5
4. TPG is an investment management firm.
6
TPG has previously invested in the
multichannel video programming distributor (MVPD) marketplace by combining regional providers
RCN, Grande, Wave, and enTouch to create Astound Broadband, which offers gigabit-speed
communications infrastructure networks.
7
In June 2021, TPG sold its controlling interest in Astound
Broadband.
8
B. Description of the Proposed Transaction
5. AT&T has agreed to contribute DIRECTV Enterprises, LLC, and the other assets of
AT&T’s video business unit to a new entity, New DIRECTV.
9
In exchange, New DIRECTV will issue to
a wholly-owned indirect subsidiary of AT&T, V HoldCo LLC, a 70 percent interest in common units of
New DIRECTV.
10
An affiliate of TPG, TPG VIII Merlin Investment Holdings, L.P., has agreed to make
a cash contribution to New DIRECTV in exchange for a 30 percent interest in common units of New
DIRECTV.
11
The Board of Managers of New DIRECTV will be comprised of two representatives from
each of AT&T and TPG, two independent non-voting Board members named by each company, and a
2
See Application at 2.
3
AT&T Inc. Annual Report (Form 10-K) at 19-22 (Feb. 25, 2021).
4
Id. at 21.
5
Application at 4.
6
Id. at 3.
7
See id. at 4.
8
See, e.g., Applications Granted for the Transfer of Control of Subsidiaries of Radiate Holdings, L.P. to Stonepeak
Associates IV LLC, Public Notice, DA 21-634 (WCB and IB May 28, 2021); Stamp Grant, IBFS File No. SES-T/C-
20201202-01289 (IB-SD granted June 1, 2021).
9
Application at 4. AT&T is retaining its Vrio Latin American satellite television business, its Sky Mexico
investment, its regional sports networks, the U-verse network facility assets, the HBO Max streaming platform, and
the other WarnerMedia businesses. Id. at 2 n.1.
10
Id. at 4.
11
Id. at 4-5. TPG is contributing $1.8 billion to the new company in exchange for its shares. AT&T & TPG To
Form New Entity To Operate AT&T’s U.S. Video Unit, Press Release, Feb. 25, 2021,
https://www.sec.gov/Archives/edgar/data/732717/000119312521056922/d544248dex991.htm. (cited at Application
n. 9). TPG and TPG VIII Merlin Investment Holdings, L.P. are ultimately controlled by David Bonderman and
James Coulter, who are both U.S. citizens. See Application at 3-4, Attach. 2.
Federal Communications Commission DA 21-838
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ninth Board seat filled by the CEO.
12
The Applicants state that the new company will be co-owned and
co-managed and jointly governed by them.
13
C. Application Review Process
6. After the Application was accepted for filing,
14
the Rural Media Group, Inc. (RMG) and
the ABC Television Affiliates Association, CBS Television Network Affiliates Association, FBC
Television Affiliates Association, and NBC Television Affiliates (collectively, the Affiliates
Associations) filed comments.
15
The Applicants responded to the comments,
16
and the Affiliates
Associations replied to the Applicants.
17
III. DISCUSSION
A. Overall Analysis
7. Under section 310(d) of the Act, we must determine whether the Applicants have
demonstrated that the proposed transfer of control of licenses from AT&T to New DIRECTV will serve
the public interest, convenience, and necessity.
18
In making this determination, we consider whether the
proposed transaction complies with the specific provisions of the Act, other applicable statutes, and the
Commission’s rules.
19
If the transaction does not violate a statute or rule, we consider whether the
transaction could result in public interest harms by substantially frustrating or impairing the objectives or
implementation of the Act or related statutes.
20
We then employ a balancing test weighing any potential
public interest harms of the proposed transaction against any potential public interest benefits.
21
Where
the potential harms appear less likely and less substantial, we accept a lesser showing of potential
benefits.
22
The Applicants bear the burden of proving, by a preponderance of the evidence, that the
proposed transaction, on balance, serves the public interest.
23
8. We are persuaded that the proposed transaction presents no substantial harms and that
granting the Application is in the public interest. Granting the Application would not violate any statute
or Commission rule and we find that the Applicants are qualified to hold FCC licenses. TPG no longer
12
Id. at 5.
13
Id. at 1.
14
See Satellite Radio Applications Accepted for Filing, Public Notice, Report No. SES-02353 (IB-SD Apr. 7, 2021);
Space Station Applications Accepted for Filing, Public Notice, Report No. SAT-01541 (IB-SD Apr. 2, 2021);
Wireless Telecommunications Bureau Assignment of License Authorization Applications, Transfer of Control of
Licensee Applications, and De Facto Transfer Lease Applications, and Designated Entity Reportable Eligibility
Event Applications Accepted For Filing, Public Notice, Report No. 15793 (WTB Mar. 31, 2021).
15
RMG Comments (May 7, 2021); Affiliates Associations Comments (May 3, 2021).
16
Applicants Response (May 12, 2021).
17
Affiliates Associations Reply (May 24, 2021).
18
See 47 U.S.C. § 310(d); Applications of AT&T Inc. and DIRECTV for Consent to Assign or Transfer Control of
Licenses and Authorizations, Memorandum Opinion and Order, 30 FCC Rcd 9131, 9139, para. 18 (2015)
(AT&T/DIRECTV Order).
19
AT&T/DIRECTV Order, 30 FCC Rcd at 9139-40, para. 18.
20
See id.
21
See id.; General Motors Corp. and Hughes Electronics Corp., Transferors, and the News Corporation,
Transferee, Memorandum Opinion and Order, 19 FCC Rcd 473, 483, para. 15 (2004) (News Corp.-Hughes Order).
22
See AT&T/DIRECTV Order, 30 FCC Rcd at 9238, para. 276.
23
See News Corp.-Hughes Order, 19 FCC Rcd at 483, para 15.
Federal Communications Commission DA 21-838
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in video programming or distribution assets and so the proposed
transaction does not increase concentration or reduce competition in any market nor raise vertical
concerns.
25
The Applicants argue that the transaction will make New DIRECTV a stronger competitor,
due to its dedicated management, ability to focus solely on video customers, and the addition of the
capital, expertise, and resources of TPG.
26
That claim is not disputed.
B. Proposed Conditions
9. The Affiliates Associations contend that because DIRECTV does not provide local-into-
local television service in 12 of the DMAs in which it operates,
27
the Commission should require New
DIRECTV to provide local-into-local television service to all 210 Nielsen DMAs.
28
The Affiliates
Associations argue that, without such a condition, New DIRECTV will have weakened incentives to serve
local communities because of the reduced role that AT&T will play in its ownership.
29
The Applicants
respond that this issue is unrelated to the proposed transaction, and that the Commission has denied
similar requests from broadcasters in prior transactions involving DIRECTV.
30
The Applicants maintain
that the proposed transaction would not affect its incentive or ability to provide local-into-local service.
31
In reply, the Affiliates Associations assert that the cases cited by Applicants were wrongly decided, but
also seek to distinguish them from the present transaction.
32
10. The Applicants are correct that the Commission has previously denied similar requests
with regard to DIRECTV.
33
We agree with the Applicants that nothing in the record indicates that the
proposed transaction would reduce New DIRECTV’s incentives to carry local broadcast channels. The
Affiliates Associations have not offered evidence or established a credible theory by which the
competitive pressures DIRECTV faces to imitate or differentiate itself from other MVPDs in those
markets would change as a result of this transaction. Accordingly, we decline to adopt the Affiliates
Associations’ proposed condition.
11. We reach a similar conclusion with respect to the condition sought by RMG. RMG,
which owns independent programming networks targeted at rural viewers, argues that access to
meaningful and relevant programming for rural viewers has decreased in recent years due to media
consolidation.
34
RMG asks that, as a condition of any grant of the Application, the Commission prohibit
New DIRECTV from removing rural content from its post-transaction programming lineup, and require
New DIRECTV to use at least 1% of its channel lineup for programming focused on rural communities.
35
24
TPG holds a less than 5% interest in Vice Media. Applicants Response at 4 & n.13.
25
Application at 10.
26
See id. at 7-8.
27
Affiliates Associations Comments at 2.
28
See id. at 4.
29
See id. at 3-4; Affiliates Associations Reply at 2.
30
See Applicants Response at 2.
31
See id. at 2-3.
32
See Affiliates Associations Reply at 5-9.
33
See, e.g., AT&T/DIRECTV Order, 30 FCC Rcd at 9277, para. 248; News Corporation and The DIRECTV Group,
Inc., Transferors, and Liberty Media Corporation, Transferee, for Authority to Transfer Control, Memorandum
Opinion and Order, 23 FCC Rcd 3265, 3330, para. 137 (2008).
34
See RMG Comments at 2-4.
35
Id. at 1-2.
Federal Communications Commission DA 21-838
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The Applicants respond that these issues, too, are unrelated to the proposed transaction and that the
Commission has previously declined to impose program carriage conditions on DIRECTV.
36
12. The Commission’s program carriage rules prohibit an MVPD, like DIRECTV, from
exerting its leverage as a distributor to require a financial interest in, or exclusive rights to, any program
service as a condition for carriage.
37
The program carriage rules also proscribe an MVPD from engaging
in conduct that unreasonably restrains the ability of unaffiliated video programming providers to compete
by discriminating in the distribution of programming based on the programmer’s affiliation or
nonaffiliation with the MVPD.
38
TPG, however, does not hold programming interests
39
and AT&T’s
programming interests will not change. The present transaction therefore does not raise vertical
integration concerns that the combined entity would discriminate against unaffiliated programmers.
Moreover, there is no evidence that the transaction would change the incentives that drive program
carriage decisions made by DIRECTV. For these reasons, we agree with the Applicants that RMG has
not established that the proposed program carriage conditions are appropriate here and we decline to
adopt them.
IV. CONCLUSION AND ORDERING CLAUSES
13. Upon review of the Application and the record, we find no evidence that the present
transaction would result in any transaction-specific harm and conclude that grant of the Application
serves the public interest, convenience, and necessity.
14. Accordingly, IT IS ORDERED, pursuant to Sections 4(i) and (j), 303(r), 309, and 310(d)
of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(r), 309, 310(d), and
sections 0.261, 0.331, 1.948, and 25.119 of the Commission’s rules, 47 CFR §§ 0.261, 0.331, 1.948,
25.119, that the Applications of AT&T Inc. and TPG Capital for Consent to Transfer Control of Licenses
ARE GRANTED.
15. IT IS FURTHER ORDERED that the above grant shall include authority for DIRECTV
Entertainment Holdings LLC to acquire control of: (a) any DIRECTV Enterprises, LLC licenses and
authorizations that may have been inadvertently omitted from the Application; (b) any licenses and
authorizations issued to DIRECTV Enterprises, LLC, or its subsidiaries during the Commission’s
consideration of the Application or during the period required for consummation of the transaction
following approval; and (c) any applications that have been filed by DIRECTV Enterprises, LLC, or its
subsidiaries and that are pending at the time of consummation.
36
See Applicants Response at 3-4; AT&T/DIRECTV Order, 30 FCC Rcd at 9223, para. 238.
37
47 CFR § 76.1301(a)-(b).
38
47 CFR § 76.1301(c).
39
See Application at 10.
Federal Communications Commission DA 21-838
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16. IT IS FURTHER ORDERED that this Memorandum Opinion and Order SHALL BE
EFFECTIVE upon release, in accordance with section 1.103 of the Commission’s rules, 47 CFR § 1.103.
FEDERAL COMMUNICATIONS COMMISSION
Thomas P. Sullivan
Chief, International Bureau
Joel D. Taubenblatt
Acting Chief, Wireless Telecommunications Bureau
Federal Communications Commission DA 21-838
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APPENDIX
Licenses to Be Transferred
Part 25 – Space Station Licenses
File No. Licensee Lead Call Sign
SAT-T/C-20210322-00037 DIRECTV Enterprises, LLC S2632
SAT-T/C-20210322-00038 DIRECTV Enterprises, LLC S2640
Part 25 – Earth Station Licenses
File No. Licensee Lead Call Sign
SES-T/C-20210322-00546 DIRECTV Enterprises, LLC E010129
SES-T/C-20210322-00547 DIRECTV Enterprises, LLC E050340
Part 90 – Private Land Mobile Radio Licenses
File No. Licensee Lead Call Sign
0009450204 DIRECTV Enterprises, LLC WPTZ691
