Opposition to the AT&T and DirecTV merger continues in spite of facts and lower costs
On May 18th, 2014, DirecTV entered final agreement with AT&T on its purchase. In June, the House Committee on the Judiciary, held a hearing on the merger, and on Wednesday July 16th, The Senate Committee on the Judiciary held a hearing on a merger between DirecTV and AT&T.
Opposition to the merger has come from those who argue that it could create a monopoly in what they view as a consolidated TV and Internet Service market. The most marked opposition came from the American Cable Association, which spoke against the AT&T merger during the House Judiciary hearing on June 24, and the Writers Guild of America West who spoke out against the merger during a Senate Judiciary hearing on the same day. The American Cable Association argues that the merger would create a monopoly and cause prices of services to increase, while the Writers Guild of America West claims that programmers would see less money for their content after the merger. AT&T and DirecTV correctly responded to the claims of monopoly by pointing out they would be providing services to markets with no service at all, and that the merger does not reduce competition as the two companies compete in completely different markets.
AT&T and DirecTV assert that they must merge in order to survive the changing market and to provide better and cheaper services customers. During the House Judiciary hearing on the merger President, Chairman, and Chief Executive Officer of DirecTV, Michael White, testified that DirecTV can no longer offer the services its customers want without AT&T. He asserted that the market has changed and that customers want Internet and TV bundles that DirecTV alone cannot offer. White points out that, “today, 78% of basic cable subscribers take at least two products [predominantly video and broadband] and 42% take three [video, broadband, and telephone].” Statements from the CEO and President of AT&T, Randall Stephenson concurred with White, pointing out that a combined AT&T and DirecTV would be able to provide bundled services that customers want but could not do so alone. Furthermore, while AT&T stated they have wired bundle services, it would not be profitable without the DirecTV merger and the entertainment packages it brings.
In addition to increased bundle opportunities, the merger would provide both companies the chance to expand their broadband services while being able to offer cheaper prices. Currently broadband Internet when paired with AT&T U-verse costs $14.95 for a 6Mbps broadband connection. The same connection costs $34.95 when paired with DirecTV. The merger would allow customers of DirecTV to receive the low cost broadband AT&T provides. Stephenson claimed with the merger, “[that] being able to offer DirecTV’s video product on a nationwide basis gives us the confidence to expand and enhance our high-speed broadband service to at least 15 million customer’s locations.” He later added, “This transaction will allow us to lower content costs for AT&T video subscribers by 20% or more.”
You can view the June 24th senate hearing: Here