AT&T's $48.5 billion DirecTV acquisition could form 2nd largest US pay TV company

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LOS ANGELES (AP) -- AT&T has agreed to buy satellite TV provider DirecTV for $48.5 billion, or $95 per share.

The proposed combination could improve AT&T's Internet service by pushing its TV subscribers into video-over-satellite service. That would free up bandwidth on AT&T's telecommunications network. It would also give AT&T a larger base of video subscribers and improve the company's ability to compete against Comcast and Time Warner Cable, which agreed to a merger in February.

AT&T's chief executive calls it a deal that "will redefine the video entertainment industry." Chairman and CEO Randall Stephenson says the combined company will be able to "deliver content to consumers across multiple screens - mobile devices, TVs, laptops, cars and even airplanes."

But the deal is expected to face tough scrutiny from the Federal Communications Commission and antitrust regulators at the Department of Justice. AT&T's U-verse competes directly for TV customers with DirecTV, and analysts say the combination would reduce the number of possible pay TV providers from four to three for about 25 percent of U.S. households. That could result in higher prices for consumers.

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