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Pleading Cycle Set For AT&T-DIRECTV Transaction

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Released: August 7, 2014
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PUBLIC NOTICE

F

ederal Communications Commission

News Media Information 202 / 418-0500

Internet: http://www.fcc.gov

TTY: 1-888-835-5322

445 12th St., S.W.

Washington, D.C. 20554

DA 14-1129

Released: August 7, 2014

COMMISSION SEEKS COMMENT ON APPLICATIONS OF AT&T INC. AND DIRECTV TO

TRANSFER CONTROL OF FCC LICENSES AND OTHER AUTHORIZATIONS

MB Docket No. 14-90

Comments/Petitions Due: September 16, 2014

Responses to Comments/Oppositions to Petitions Due: October 16, 2014

Replies to Responses/Oppositions Due: November 5, 2014

On June 11, 2014, AT&T Inc. (“AT&T”) and DIRECTV (collectively, the “Applicants”) jointly

submitted applications to the Commission seeking consent to transfer control of various Commission

licenses and other authorizations (collectively, the “Application”) pursuant to Section 310(d) of the

Communications Act of 1934, as amended (“Act”).1 The proposed license transfers, if completed, would

effectuate the sale of all the assets of DIRECTV and its subsidiaries and related entities to a subsidiary of

AT&T. We seek comment from all interested persons to assist the Commission in its independent review

of the proposed transfers of licenses and other authorizations referred to in this Public Notice.2

The

details of the proposed transfers and the procedures on how to file petitions to deny and comments are set

forth below.

DESCRIPTION OF THE APPLICANTS

DIRECTV is a multichannel video programming distributor (“MVPD”) that offers direct-to-home

satellite digital television services to consumers nationwide. According to the Application, DIRECTV is

a “pure-play” satellite video provider with approximately 20 million U.S. subscribers.3

In addition, it

holds interests in entities with approximately 18 million video subscribers in Latin America.4

Currently,

DIRECTV does not provide any broadband or voice services of its own, but offers such services in

conjunction with third-party telecommunications, cable, and satellite partners.5

1 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 (filed June 11, 2014) (“Application”).

2 A list of the licenses and authorizations subject to the filed Application is set forth in the Attachment to this Public

Notice.

3 Application at 13.

4 Id.

5 Id. at 13-14.

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DIRECTV owns and operates two regional sports networks (“RSNs”), Root Sports Pittsburgh and

Root Sports Rocky Mountain, and holds a minority interest in, and manages, the Seattle-based RSN, Root

Sports Northwest.6

DIRECTV also has a 42 percent non-controlling interest in the Game Show Network,

and smaller, minority interests in the MLB Network, the NHL Network, and a handful of other networks.7

AT&T provides wireless, high-speed Internet, advanced TV, local and long distance voice,

mobile broadband, and Wi-Fi services in the United States.8

In addition, AT&T offers wireless service

and IP-based business communications services internationally.9

Within the United States, AT&T’s

wireline footprint covers portions of 22 states, while its 4G LTE wireless network covers approximately

290 million people with plans to expand to 300 million.10

AT&T offers, or expects to offer, bundles of high-speed broadband, video, and Voice over

Internet Protocol (“VoIP”) services under its U-verse brand to approximately 57 million customer

locations or 75 percent of its wireline footprint.11

According to the Application, of these 57 million

customer locations, AT&T plans to deploy fiber to the node or fiber to the premise technologies to deliver

U-verse video, high-speed broadband, and VoIP services to 33 million customer locations.12

In addition,

AT&T’s IPDSLAM (“IPDSL”) technology will deliver U-verse high-speed broadband and VoIP services

to the approximately 24 million remaining customer locations.13

According to the Application,

approximately 11.3 million households subscribe to U-verse in some form.14

This includes 5.7 million

video subscribers, 11.0 million broadband subscribers, and 4.1 million VoIP subscribers.15

AT&T

estimates that more than 97 percent of its U-verse video subscribers purchase at least one other U-verse

product, and about two-thirds of U-verse video subscribers bundle three or four services from AT&T.16

DESCRIPTION OF THE PROPOSED TRANSACTION

According to the Application, AT&T has entered into an agreement with DIRECTV whereby

AT&T will acquire DIRECTV in a stock-and-cash transaction.

Under the terms of the merger,

DIRECTV shareholders will receive $28.50 per share in cash plus the right to receive between 1.724 and

1.905 shares of AT&T common stock.17

According to the Application, at the closing of the transaction,

DIRECTV will merge with and into a wholly owned subsidiary of AT&T, Steam Merger Sub LLC,

6 Id. at 14.

7 Id.

8 Id. at 10.

9 Id.

10 Id.

11 Id. at 10-11.

12 Id.

13 Id. at 11.

14 Id. at 13.

15 Id.

16 Id.

17 Id. at 16.

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which will be renamed DIRECTV.18

The new DIRECTV will own the stock of the subsidiaries of the

pre-merger DIRECTV, and these subsidiaries will continue to hold the Commission licenses and other

authorizations they held prior to the transaction.19

The Applicants assert that the proposed transaction will generate substantial public interest

benefits. According to the Applicants, the merger will unite complementary businesses and provide each

party with the missing bundle components needed to provide integrated services.20

With competitive

bundles of high-speed broadband, video, and wireless services, the Applicants assert that the combined

company will result in a more competitive alternative to cable service.21

The Applicants also commit to

guaranteed pricing for three years after closing for stand-alone wireline IP broadband service in areas

where AT&T currently offers wireline broadband.22

Furthermore, the Applicants state that they will

continue to offer DIRECTV’s video service on a stand-alone basis, and commit to guaranteed nationwide

pricing for three years after the closing of the transaction.23

The Applicants estimate the transaction will generate substantial cost savings and other synergies,

including savings in content-acquisition costs and savings from consolidated business operations.24

With

these claimed cost synergies and efficiencies, the Applicants commit to offer high-speed LTE-based fixed

wireless local loop broadband service, which utilizes dedicated wireless spectrum, to 13 million customer

locations, mostly in rural, underserved areas where AT&T does not provide high-speed broadband service

currently.25

The Applicants also commit to upgrade high-speed broadband with fiber to the premise to an

additional 2 million customer locations.26 The Applicants plan to complete these deployments within four

years of the transaction closing date.27

With this promised proposed broadband expansion, the Applicants

state that they expect to offer broadband service to 70 million customer locations utilizing fiber, DSL, and

in some locations, AT&T’s LTE-based fixed wireless local loop broadband service.28

In addition, the

Applicants have pledged continued compliance with the Commission’s 2010 Open Internet rules for three

18 Id.

19 Id. at 16-17.

20 Id. at 23, 29-30.

21 Id. at 29-33.

22 Id. at 50. The Applicants claim that the combined company will provide stand-alone wireline broadband service

with speeds of at least 6 Mbps, where feasible, at a 12-month price no greater than $34.95 per month. Id.

23 Id. at 50-51. According to the Application, the combined company will offer the same nationwide package prices

for all customers, regardless of whether the customer is located inside or outside of AT&T’s wireline footprint. Id.

at 51.

24 Id. at 34-39.

25 Id. at 42-45. The Applicants claim to expect that the LTE-based fixed wireless local loop broadband product

will perform as well as other wireline broadband services advertised at speeds of 15-20 Mbps. Id. at 43.

26 Id. at 41-42. AT&T makes this commitment in addition to the fiber and Project VIP broadband expansion plans

AT&T has already announced. Id. at 41-42, 50.

27 Id. at 41, 45.

28 Id. at 39.

3

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years post-merger.29

Furthermore, the Applicants state that the proposed transaction will not alter

AT&T’s plans to participate meaningfully in the Commission’s planned spectrum auctions later this year

and in 2015.30

Applicants also assert that the proposed transaction will promote competition and will not result

in any public interest harms. The Applicants contend that the assets of DIRECTV, primarily satellite

video services, and AT&T, primarily broadband services and U-verse video, have limited competitive

overlap.31

According to the Applicants, in the limited areas where horizontal competition exists between

AT&T’s and DIRECTV’s video services, any loss of competition will be outweighed by the benefits of

competitive bundled services.32

Applicants further argue that the combined company will have strong

incentives to compete for stand-alone broadband customers, including significant competition from cable

companies and other broadband providers.33

TRANSFER OF CONTROL APPLICATIONS

The file numbers and call signs of the DIRECTV facilities that are the subject of the applications to

transfer control to AT&T are listed in the Attachment to this Public Notice.34

Interested parties should refer

to the transfer of control applications for a listing of the licenses and other authorizations. Parties should be

aware that additional applications may have to be filed to identify any additional licenses and other

authorizations in the services noted. The Applicants have requested that the Commission’s grant of

consent to the transfer of control of the licenses and other authorizations include the authority for AT&T

to acquire control of: (1) any licenses and other authorizations issued to DIRECTV or to its subsidiaries

during the Commission’s consideration of the Application and the period required for the consummation

of the proposed transaction following approval; (2) applications that will have been filed by DIRECTV or

its subsidiaries and that are pending at the time of consummation of the proposed transaction; and (3) any

DIRECTV licenses and other authorizations that may have been inadvertently omitted from the

Application.35

EX PARTE STATUS OF THIS PROCEEDING

Pursuant to section 1.1200(a) of the Commission’s rules,36 the Commission may in its discretion

modify the ex parte procedures in particular proceedings if the public interest so requires. As we have

29 Id. at 51; see also Preserving the Open Internet, GN Docket No. 09-191, Report and Order, 25 FCC Rcd 17905

(2010) (“Open Internet Order”), aff’d in part, vacated and remanded in part sub nom. Verizon v. FCC, 740 F.3d 623

(D.C. Cir. 2014).

30 Application at 51, n.166. Provided there is sufficient spectrum available, AT&T states its intention to bid at least

$9 billion in the Commission’s forthcoming incentive auction. Id. See also Expanding the Economic and

Innovation Opportunities of Spectrum Through Incentive Auctions, GN Docket No. 12-268, Report and Order, FCC

No. 14-50 (2014) (adopting rules to implement the broadcast television spectrum incentive auction).

31 Application at 68-70.

32 Id. at 69-71.

33 Id. at 80-82.

34 Id. at Appx. A-C.

35 Id. at 85-86.

36 47 C.F.R. § 1.1200(a).

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previously announced, these applications will be governed by the permit-but-disclose ex parte procedures

that are applicable to non-restricted proceedings under section 1.1206 of the Commission’s rules.37

Parties making oral ex parte presentations are reminded that they must file notices of the presentations that

must contain, with regard to material already in the written record, either a succinct summary of the matters

discussed or a citation to the page or paragraph number in the party’s written submission(s) where the

matters discussed can be found, and with regard to any new information, a summary of the new data and

arguments presented.38

Memoranda must contain a summary of the substance of the ex parte presentation

and not merely a listing of the subjects discussed. More than a one or two sentence description of the views

and arguments presented is generally required. All of the disclosure requirements pertaining to oral and

written ex parte presentations are set forth in section 1.1206(b).39

Requests for exemptions from the

disclosure requirements pursuant to section 1.1204(a)(9)40 may be made to Jonathan Sallet at (202) 418-

1700 or Jamillia Ferris at (202) 418-2663.

REQUESTS FOR EX PARTE MEETINGS

All requests for meetings with Commission staff regarding this Docket should be made online,

using the link at http://transition.fcc.gov/transaction/att-directv_exparte-meeting-request. Those who

lack Internet access may direct their requests to Vanessa Lemmé, Media Bureau, (202) 418-2611.

GENERAL INFORMATION

The applications for transfer of control of the licenses and other authorizations referred to in this

Public Notice have been accepted for filing upon initial review. The Commission reserves the right to

return any application if, upon further examination, it is determined to be defective and not in conformance

with the Commission’s rules, regulations, or policies.

Interested persons must file comments or petitions to deny the Application no later than

September 16, 2014. Responses to comments or oppositions to petitions must be filed no later than

October 16, 2014. Replies to responses or oppositions must be filed no later than November 5, 2014.

Persons and entities that file comments or petitions to deny may participate fully in the proceeding,

including seeking access to any confidential and/or highly confidential information that may be filed

under a protective order.41 Persons and entities that do not file petitions to deny, however, even if they file

37 Id. § 1.1206; see also Commission Opens Docket for Proposed Transfer of Control of DIRECTV to AT&T Inc.,

Public Notice, 29 FCC Rcd 6045 (2014).

38 An ex parte presentation is any communication (spoken or written) directed to the merits or outcome of a proceeding

made to a Commissioner, a Commissioner’s assistant, or other decision-making staff member, that, if written, is not

served on other parties to the proceeding, or, if oral, is made without an opportunity for all parties to be present. See 47

C.F.R. § 1.1202(a)-(c).

39 Id. § 1.1206(b).

40 Id. § 1.1204(a)(9).

41 On June 11, 2014, the Media Bureau released a Joint Protective Order governing the review of both confidential

information and highly confidential information submitted by the Applicants and others in this proceeding.

Applications of AT&T Inc. and DIRECTV for Consent to Assign or Transfer Control of Licenses and Authorizations,

Joint Protective Order, 29 FCC Rcd 6047 (2014).

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comments, generally may not seek reconsideration of the Commission’s decision regarding the transfer of

control of the licenses or other authorizations at issue or appeal a final decision to the courts.42

To allow the Commission to consider fully all substantive issues regarding the Application in

as timely and efficient a manner as possible, petitioners and commenters should raise all issues in

their initial filings. New issues may not be raised in responses or replies.43

A party or interested

person seeking to raise a new issue after the pleading cycle has closed must show good cause why it

was not possible for it to have raised the issue previously. Submissions after the pleading cycle has

closed that seek to raise new issues based on new facts or newly discovered facts should be filed

within 15 days after such facts are discovered. Absent such a showing of good cause, any issues not

timely raised may be disregarded by the Commission.

All filings concerning matters referenced in this Public Notice should refer to MB Docket No. 14-

90, and if they pertain only to specific applications or matters, to the specific file numbers of the

individual applications or matters as well.

Comments may be filed using the Commission’s Electronic Comment Filing System (ECFS).

See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

§

Electronic Filers: Comments may be filed electronically using the Internet by accessing the

ECFS: http://fjallfoss.fcc.gov/ecfs2/.

§

Paper Filers: Parties who choose to file by paper must file an original and one copy of each

filing. Filings may be sent by hand or messenger delivery, by commercial overnight courier, or

by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the

Commission’s Secretary, Office of the Secretary, Federal Communications Commission.

§

All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary

must be delivered to FCC Headquarters at 445 12th Street, SW, Room TW-A325,

Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries

must be held together with rubber bands or fasteners. Any envelopes and boxes must be

disposed of before entering the building.

§

Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority

Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

§

U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th

Street, SW, Washington DC 20554.

42 47 U.S.C. § 405(a); 47 C.F.R. § 1.106(b)(1) (“If the petition is filed by a person who is not a party to the

proceeding, it shall state with particularity the manner in which the person’s interests are adversely affected by the

action taken, and shall show good reason why it was not possible for him to participate in the earlier stages of the

proceeding.”); 47 C.F.R. § 1.106(m); Shareholders of Tribune Co., Transferors & Sam Zell, et al. Transferees, MB

Docket No. 07-119, Memorandum Opinion and Order on Reconsideration, 29 FCC Rcd 844, 847-49, ¶¶ 10-15

(2014) (discussing prerequisites for petitions to deny).

43 See Section 1.45(c) of the Commission’s Rules, 47 C.F.R. § 1.45(c).

6

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In addition, one copy of each submission must be sent to the following:

1. The Commission’s duplicating contractor, Best Copy and Printing, Inc., at fcc@bcpiweb.com, or

(202) 488-5563 (facsimile);

2. Vanessa Lemmé, Industry Analysis Division, Media Bureau, at Vanessa.Lemme@fcc.gov, or (202)

418-2053 (facsimile);

3. Brendan Holland, Industry Analysis Division, Media Bureau, at Brendan.Holland@fcc.gov, or

(202) 418-2053 (facsimile);

4. Christopher Sova, Competition Policy Division, Wireline Competition Bureau, at

Christopher.Sova@fcc.gov, or (202) 418-1413 (facsimile);

5. Daniel Ball, Spectrum and Competition Policy Division, Wireless Telecommunications Bureau, at

Daniel.Ball@fcc.gov, or (202) 418-7447 (facsimile);

6. Jim Bird, Office of General Counsel, at TransactionTeam@fcc.gov, or (202) 418-1234 (facsimile);

and

7. Each Commissioner or Commission employee who attended or otherwise participated in the ex

parte meeting.

Any submission that is e-mailed to Best Copy and Printing Inc. and the persons listed above should include

in the subject line of the e-mail: (1) MB Docket No. 14-90; (2) the name of the submitting party; and (3) a

brief description or title identifying the type of document being submitted (e.g., MB Docket No. 14-90,

AT&T Inc., Ex Parte Notice).

People with Disabilities. To request materials in accessible formats for people with disabilities

(braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the

Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

Availability of Documents. Documents in this proceeding will be available for public inspection

and copying during business hours at the FCC Reference Information Center, Portals II, 445 12th Street,

SW, Room CY-A257, Washington, DC 20554. The documents may also be purchased from Best Copy

and Printing, Inc., telephone (202) 488-5300, facsimile (202) 488-5563, TTY (202) 488-5562, e-mail

fcc@bcpiweb.com. The Application is also available electronically through the Commission’s ECFS,

which may be accessed on the Commission’s Internet website at http://www.fcc.gov. Additional

information regarding the proposed transaction will be available on the FCC’s Office of General Counsel’s

AT&T-DIRECTV website, http://www.fcc.gov/transaction/att-directv, which will contain an unofficial

listing and electronic copies of materials in this Docket.

Further Information. For further information, contact Brendan Holland, Media Bureau, (202) 418-

2757, or Chris Sova, Wireline Competition Bureau, (202) 418-1868. Press inquiries should be directed to

Janice Wise, Media Bureau, (202) 418-8165. TTY: (202) 418-2555 or (888) 835-5322.

-FCC-

7

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ATTACHMENT

Part 25 – Satellite Communications Licenses

Satellite Space Station Licenses

File No.

Licensee

Name/Call Sign

Service

Authorized

SAT-T/C-20140611-00060

DIRECTV Enterprises, LLC

DIRECTV 4S (S2430)

DBS

DIRECTV 7S (S2455)

DBS

DIRECTV 8 (S2632)

DBS

DIRECTV 9S (S2669)

DBS

DIRECTV 5 (S2673)

DBS

SAT-T/C-20140611-00061

DIRECTV Enterprises, LLC

DIRECTV 8 (S2132)

FSS

SPACEWAY 2 (S2133)

FSS

SPACEWAY 1 (S2191)

FSS

DIRECTV 11 (S2640)

FSS

DIRECTV 10 (S2641)

FSS

DIRECTV 9S (S2689)

FSS

DIRECTV RB-1/14 (S2711,

17/24 GHz

S2869)

BSS and FSS

DIRECTV RB-2/15 (S2712)

17/24 GHz

BSS

DIRECTV RB-2A/12

17/24 GHz

(S2796, S2797)

BSS and FSS

DIRECTV KU-79W (S2861)

FSS

DIRECTV KU-76W (S2888)

FSS

Transmit/Receive Earth Station Licenses

File No.

Licensee

Call Sign

SES-T/C-20140611-00505

DIRECTV Enterprises, LLC

E020172

E020241

E020242

E030105

E030117

E050112

E050113

E050121

E050122

E050255

E060014

E060236

E060441

E930229

8

image09-00.jpg612x792

E930304

E930485

E950349

SES-T/C-20140611-00506

DIRECTV Enterprises, LLC

E010129

E010130

E010237

E050229

E050230

E050286

E060187

E060188

E060298

E060299

E070002

E070023

E070027

E070073

E070074

E070111

E070122

E070123

E080025

E080026

E080027

E080028

E080056

E080057

E090024

E090025

E090068

E090069

E090076

E090107

E090173

E100079

E100080

E100119

E100120

E100121

E100122

E110004

E120108

E120109

E120110

E120148

E130081

E930191

9

image10-00.jpg612x792

E980285

E990159

SES-T/C-20140611-00509

California Broadcast Center, LLC

E020091

Transmit-Only Earth Station Licenses

File No.

Licensee

Call Sign

SES-T/C-20140611-00510

DIRECTV Enterprises, LLC

E050340

Receive-Only Earth Station Registrations

File No.

Registration Holder

Call Sign

SES-T/C-20140611-00507

DIRECTV Enterprises, LLC

E040179

E040180

SES-T/C-20140611-00508

DIRECTV Enterprises, LLC

E980170

E980341

Part 74, 87, 90, and 101 – Private Wireless Licenses

ULS File No.

Licensee

Call Sign

0006302429

DIRECTV Enterprises, LLC

WPTZ691

WPZC401

WQHM919

WQIU946

WQTE840

0006312383

DIRECTV Sports Net Rocky

WQPB424

Mountain, LLC

0006302465

The DIRECTV Group, Inc.

71TV

10

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