Deals

AT&T CEO: Our DirecTV buy ‘is not Comcast-Time Warner Cable’

Image Credit: illustration via Tom Cheredar/VentureBeat

AT&T CEO Randall Stephenson was on Capitol Hill today to argue in support of his company’s proposed $48.5 billion takeover of satellite TV provider DirecTV.

Stephenson’s angle for convincing regulators to approve the AT&T-DirecTV deal consists of pointing out that — unlike other big mergers being considered — this merger does not marry media and distribution companies and therefore won’t push up prices or limit consumer choice.

In other words, the AT&T-DirecTV merger is the least awful compared to all the other bad mergers.

“We’re putting (DirecTV’s satellite) TV product with our broadband wireless product . . .There is not a content player per se in this transaction,” Stephenson said before a House Judiciary Committee panel.

Stephenson is referring to Comcast’s proposed $45.2 billion bid to buy Time Warner Cable. Comcast became a media content company when it acquired NBC/Universal in 2011.

“This is not Comcast-Time Warner, this is not two cable companies getting together, this is not Sprint and T-Mobile,” he said.

AT&T says its services will be “complimentary” with DirecTV’s, but AT&T actually competes with DirecTV in 22 markets with its U-Verse television service. The removal of one of those providers will reduce competition in those areas and limit programming choices. And with one less choice for TV service, it could cause prices to rise for consumers.

Not surprisingly, some lawmakers are skeptical of AT&T’s spin.

“We’re concerned that there may be too much, too rapid consolidation in the telecommunications industry,” said Rep. John Conyers (D-Mich.). “This ongoing wave of consolidation will without question result in fewer firms and may harm consumers by limiting choices and also raising prices after all. … I will be looking and listening to make sure that we are not moving in the wrong direction.”

Consumer advocates have long pointed out that AT&T’s and Comcast’s M&A adventures will ultimately be bad news for consumers.

“For the amount of money and debt AT&T and Comcast are collectively shelling out for their respective mega-deals, they could deploy super-fast, gigabit-fiber broadband service to every single home in America,” president of media advocacy group Free Press Craig Aaron said in a statement to VentureBeat.

This isn’t the first time executives at both companies have argued the benefits of such a merger. Earlier this month Stephenson and DirecTV CEO Michael White presented their case to the Federal Communications Commission (FCC). Both claimed that the companies’ products are complimentary, and will more closely match consumer demand.

“We’ve competed aggressively,” White told lawmakers. “In recent years, however, broadband is changing everything. If we want to continue to compete effectively in today’s Internet-driven economy, we must adapt as well.”

Some have observed that industry consolidation can feed on itself, causing large conglomerates to size up (through acquisitions) to match the scale of their competitors. AT&T told the FCC in a filing that the merger with the largest U.S. satellite TV provider would help it compete with the cable companies (like Comcast and Time Warner).

Ultimately, it will be the Justice Department (which must prove that a merger complies with antitrust laws) and the FCC that will have to approve the AT&T/DirecTV merger.

Via Reuters

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