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AT&T, DirecTV announce $48 billion merger
By Cecilia Kang, Sunday, May 18, 5:16 PM E-mail the writer
AT&T and DirecTV on Sunday announced an approximately $48 billion merger that would create a new telecom and television behemoth to rival cable firms — while raising fresh concerns over competition and options for consumers.
AT&T would gain DirecTV’s 20 million U.S. subscribers, a company with strong cash flows and an ability to fatten its bundle of offerings. The combined firm would be able to offer phone, high-speed Internet and paid television subscriptions to more customers — packages only cable firms such as Comcast have been able to sell.
It is the latest mega-merger to be announced this year in a dramatically shifting telecommunications industry. The titans of the industry have recently rushed to bulk up — in overall size and in diversity of service offerings — as their legacy phone and television businesses fray and consumers turn to the Internet for communications and entertainment.
The deals, which must be approved by federal regulators, have prompted new concern that consumers could be left with fewer options and even higher prices after years of creeping increases in monthly bills. Last year, U.S. cable television prices increased 5.1 percent to an average $64, triple the rate of inflation, according to a government report.
“The industry needs more competition, not more mergers,” said John Bergmayer, a senior staff attorney at Public Knowledge, a nonprofit consumer advocacy group. “We’ll have to analyze this one carefully for potential harms both to the video programming and the wireless markets.”
After a failed attempt three years ago at buying wireless provider T-Mobile, AT&T had been searching for alternative acquisitions. But its choices were limited, with regulators expressing great concern that the wireless and high-speed-Internet markets were not competitive enough.
The Dallas-based company said it would gain broad strategic benefits from buying the nation’s second-largest paid-television provider. The phone giant would have greater power with television programmers to bring down licensing costs. And as the nation’s second-largest wireless carrier, it could use its new prominence in the television industry to bring videos to its mobile customers. El Segundo, Calif.-based DirecTV has an exclusive contracts with programmers, including NFL Sunday Ticket, which allows football fans to watch their favorite teams even if they live outside the local television markets serving the teams.
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