Congress will convene two hearings today, one in each chamber, to discuss the proposed AT&T acquisition of DirecTV, a proposed $48.5 billion deal.
Guests of honor will be AT&T President and CEO Randall Stephenson and DirecTV Chairman and CEO Michael White. Both men will be eager to present their case on why the merger will bring video and broadband Internet service to new markets, increase competition and bring lower costs to consumers.
The prospect of the AT&T-DirecTV deal occurs in the looming shadow of the also pending Comcast and Time Warner Cable (TWC) $45 billion merger deal. That transaction would create a cable monster (not a Monster Cable) with 30 percent of the cable market.
It is likely that since the proposed Comcast - TWC merger represents two competitors coming together it will face substantially greater regulatory hurdles than the AT&T-DirecTV deal, since the latter pair only compete with each other in limited geographical areas and in types of services.
It is a component of AT&T's rationale for the deal that the merger will create competition on the consolidated cable market. For this reason, most observers believe the path to Congressional approval will be much easier for AT&T - DirecTV than for Comcast - TWC
An analysis of the deal reveals AT&T is interested in adding DirecTV's video/television customer base to its already strong wireless phone and broadband Internet services. Currently, AT&T's cable television service, U-Verse, is struggling with only 5 million subscribers and poor leverage for licensing deals with networks. DirecTV's well-established licensing and pull with networks and content providers solves that problem for AT&T. Of special interest to AT&T is DirecTV's exclusive deal with the NFL's highly lucrative Sunday Ticket package.
The transaction will offer consumers bundles that include video, high-speed broadband and mobile services using all of its sales channels, including AT&T's 2,300 retail stores and thousands of authorized dealers of both companies nationwide.
"This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens, including mobile devices, TVs, laptops, cars, even airplanes. At the same time, it creates immediate and long-term value for our shareholders," said Stephenson.
AT&T has claimed benefits of the merger will include new availability of high-speed broadband service to 15 million people, mostly in rural areas where no AT&T broadband service is currently provided. Customers will be able to buy broadband service as a standalone or in a bundle. Nationwide package pricing on DirecTV will be launched; and both companies will commit to net neutrality.
