AT&T clearly is not taking
Comcast's new acquirement efforts lying down; it just declared plans to buy
DirecTV in a contract worth about $48.5 billion. The communications giant appreciates
a takeover as an opportunity to expand how it delivers video beyond just the
bundles it has today. If officials approve the union, AT&T could send
conventional and internet-based video to virtually any place you happen to be,
whether it's on your phone or in mid-flight. This also represents a content
grab -- DirecTV has the exclusive rights to NFL Sunday Ticket and other premium
programming, so there's a chance that much of its content could reach U-verse
and other AT&T offerings.
The telecom is making a lot of
promises to satisfy valves that will no doubt look at the proposed mega-buyout
very closely -- AT&T clearly wants to avoid a repeat of its failed attempt
to buy T-Mobile in 2011. It hopes to
bring high-speed internet access to 15 million additional customers, primarily
in rural areas where a mix of fixed wireless and fiber-to-the-home could get
people online. It's also guaranteeing internet-only service plans fast enough
for online video ("at least" 6Mbps) for the next three years, and it
will honor the FCC's 2010 net neutrality rules (which typically prevent
blocking or throttling internet services) for that same period of time.
DirecTV's stand-alone packages would be available at consistent prices
nationwide during this stretch, too.
The move won't affect AT&T's
plans to bid in the FCC's upcoming wireless spectrum auction, and it estimates
that the purchase will start adding value within about a year of closing.
Whether or not it closes is another matter. The US government already has
concerns about the possible anti-competitive effects of Comcast's proposed
buyout of Time Warner Cable; it's likely that the feds will take a similar
approach to AT&T and DirecTV. If Comcast runs into regulatory trouble, it
won't be surprising if AT&T ends up in the same boat.
Update: Not surprisingly, consumer groups aren't big fans. Free
Press contends that AT&T has "clearly run out of ideas," and that
the move is solely about eliminating competition. Consumer Reports'
advocacy wing, Consumers Union, also believes that Americans are getting a raw
deal. You'll find its full statement below.
On the heels of Comcast's bid for
Time Warner Cable, AT&T is going to try to pull off a mega-merger of its
own. These could be the start of a wave of mergers that should put federal
regulators on high alert. AT&T's takeover of DirecTV is just the latest
attempt at consolidation in a marketplace where consumers are already saddled
with lousy service and price hikes. The rush is on for some of the biggest industry
players to get even bigger, with consumers left on the losing end. You can't
justify AT&T buying DirecTV by pointing at Comcast's grab for Time Warner,
because neither one is a good deal for consumers.
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