After weeks of negotiation, the companies' executives are now selling it as a tie-up of two companies with complementary lines of products that could be mixed and matched for a wide range of bundled packages.
Like other mergers of this size, the deal poses complex issues to consider for consumers and the regulators who will have to okay or nix the proposal. Here are some questions to ponder.
Q: What will happen to NFL Sunday Ticket?
DirecTV's exclusive contract with the NFL to broadcast all its games live is the company's crown jewel and a big reason why AT&T went hard after it.
The contract expires after the end of the upcoming season. Other content providers, including reportedly Google, are interested in replacing DirecTV. But DirecTV CEO Mike White said Monday he's confident they will have a renewed deal by the end of the year.
AT&T has an option to walk away from the merger if DirecTV can't renew "substantially on the terms discussed between" the two companies, according to a filing AT&T submitted to the Securities and Exchange Commission Monday.
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AT&T won't say if it'll make NFL Sunday Ticket available to U-Verse customers. But it doesn't seem too far-fetched to speculate that AT&T tries to find a way to deliver NFL games wirelessly -- streaming on Wi-Fi or on the cellular network -- and charge you for the service. Demand for NFL games is no joke.
Q: AT&T and DirecTV seem to be very different from each other. What's the rationale for the merger?
Fast-changing technology and AT&T's need for more customers gained quickly.
AT&T has a lot of good businesses going for it – the nation's second largest wireless carrier and the limited but growing U-Verse unit t! hat offers landline Internet and pay-TV that are delivered mostly through its fiber-optic lines.
U-Verse has about 11 million customers only in 22 states, including 5.7 million who subscribe to pay-TV. Expanding fiber optic lines is expensive, as are all the marketing and sales tactics to woo customers away from competitors.
With this deal, AT&T gains 20 million customers nationwide who pay about $100 a month. With DirecTV's satellites able to reach rural areas, AT&T would no longer face geographical limits in its ability to sell TV.
AT&T is also responding strategically to the new TV revolution, wherein customers are increasingly watching live-TV streamed on their phones and tablets. AT&T is telling Wall Street that it sees DirecTV as the best-in-class TV deliverer with comprehensive programming rights -- especially NFL Sunday Ticket games -- and expertise in licensing and user-experience.
Q: Will my prices rise as cable and satellite TV companies get larger?
The cable (or satellite) bill likely will never drop. So yes, prices will continue to rise. But AT&T -- and Comcast, which is buying Time Warner Cable -- would argue that they will have more negotiation leverage against content providers, ESPN for example, and could help control the rate of increase in programming costs that they say are passed onto consumers.
DirecTV said Sunday the post-merger company will offer DirecTV's TV service on a stand-alone basis at current prices for "at least three years" after closing.
Q: Does this mean AT&T's U-Verse investment will be cut back?
It doesn't look like it. AT&T promises to expand broadband Internet by 15 million homes and offices to reach 70 million within four years of the transaction's closing. It'll use a combination of transmission methods.
In the markets where it's financially viable, AT&T plans to install more fiber optic lines. In more rural areas, it'll use the wireless "local loop" technology, using a direct ! radio con! nection between your home and a nearby antenna tower that receives broadband Internet from the local AT&T exchange.
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