Exclusive: State attorneys general probing AT&T deal for DirecTV

[September 12, 2014]  By Diane Bartz

WASHINGTON (Reuters) - State attorneys general working to determine whether Comcast Corp's deal to buy Time Warner Cable Inc  is legal have expanded their investigation to include AT&T Inc's  plans to buy DirecTV,  according to sources close to the merger probe.

Some two dozen states were already coordinating with the U.S. Justice Department to interview critics and proponents of the Comcast merger, which some lawmakers and public interest groups fear will result in higher costs and less competition.

The states have now broadened their focus to include AT&T's $48.5 billion proposed deal for DirecTV, the No. 1 U.S. satellite TV provider, according to sources close to the probe, asking not to be named because the matter is not public.

New York and California are part of the multi-state review, the sources said.

Florida acknowledged that it was part of the group. Indiana said it was looking at the deal but declined to say if it was working with the group of state attorneys general.

It is not unusual for attorneys general to join a Justice Department investigation of a major merger that potentially affects consumers in their state.

Asked about the expanded investigation, AT&T spokesman Michael Balmoris said: "We look forward to discussions with these state attorneys generals on the significant consumer benefits created by this merger."

While antitrust experts have said they expect the AT&T deal to be approved, the proposed transaction has raised hackles for several reasons.

One is because of lost competition in the estimated quarter of U.S. homes where AT&T, the No. 2 wireless carrier, offers U-Verse, fiber optic delivery of television programming, high-speed Internet and home phone service. DirecTV, a satellite alternative to local cable providers, is present in those markets.

The attorneys general also are looking at programming issues, one source said. Content producers and smaller cable operators worry that the combined company might wield too much power over the creation, distribution and costs of programming.

They also are asking questions about the merger's effects on the development of high-speed broadband. As part of the deal, AT&T pledged to expand broadband to 70 million consumer locations.

The Justice Department and Federal Communications Commission must sign off on both deals before they can close.

(Reporting by Diane Bartz; Editing by Bill Trott and Tom Brown)

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