AT&T, DirecTV merger raises fears

Media organisations and lawmakers have raised concerns about decreasing competitiveness in US pay TV following telecom giant AT&T’s US$48.5m acquisition of DirecTV.

The deal, confirmed yesterday, would give AT&T, the country’s second-largest wireless carrier, control of the country’s largest satellite provider.

But the National Association of Broadcasters, a trade organisation for small cable operators, said it has deep concerns over the transaction.

“AT&T’s proposed merger with DirecTV demands a hard look in an increasingly consolidated broadband and pay television marketplace,” said NAB spokesman Dennis Wharton in a statement.

“It is hard to see how decreasing competitors in the pay TV marketplace – while increasing regulatory restraints on local TV stations – truly benefits consumers.”

Meanwhile, the America Cable Association said it was “troubled” by the wave of consolidation within the subscription video marketplace following the recent Comcast/TWC deal, a related Comcast/Charter alliance and now AT&T’s move for DirecTV.

“We think many questions need answers, including: Will consumers not served by Comcast, Charter and AT&T be harmed in a marketplace dominated by a few large players, especially when this consolidation is combined with rampant consolidation in the broadcast industry?” said ACA CEO Matthew Polka.

The proposal is likely to face regulatory scrutiny from the Federal Communications Commission and the Justice Department because it would effectively cut the number of internet-delivered video providers from four to three for about 25% of US households.

“Given that the companies in each of the latest mergers own programming, congress and the FCC must consider whether the market will be better or worse as a whole, and if worse, what rules will make the market better,” added Polka.

Lawmakers have also voiced their concerns. Senate Judiciary Chairman Patrick Leahy said he was worried the telecoms market was “trending even further toward one that favours big companies over consumers.”

“I will closely monitor the FCC and the antitrust authorities’ response to this announcement,” he said. “The Senate Judiciary Committee will be looking closely at this transaction.”