About a year ago, AT&T announced its strategic response to the proposed Comcast-TWC merger ...become a bigger (stronger) firm in pay-TV by merging with DirecTV. The value of the merger? $48.5B
While the number of competitors in many local markets will be reduced in this horizontal merger, the merger is likely to be approved by regulators. Why?
1) No effect on the growing broadband market as DirecTV does not offer broadband
2) While there will be fewer competitors in the AT&T U-verse markets in 22-states, the growth in Pay-TV subscribers has turned negative in the past few years.
3) No vertical restraint issues as AT&T/DirecTV have very limited content ownership interests
4) The hope/promise of a stronger competitor (better pricing bundles, service) to Comcast and TWC in local markets
5) Greater bargaining power with content owners
6) Promise of broadband expansion to more rural communities
7) Regulatory approval concessions
Will consumers be better off? Who knows! Maybe the best we can hope for is not to be any worse off.
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