AT&T's (T - Get Report) proposed $49 billion acquisition of DIRECTV (DTV), made public on Sunday, has Internet activists all but frothing at the mouth. Afterall, Common Cause, the Consumers Union, Public Knowledge and Free Press, to name but a few, are already quite busy attempting to amass public opposition to Comcast's (CMCSA) proposed $45 billion deal for Time Warner Cable (TWC).
Add to those two oversized deal is FCC Commissioner Tom Wheeler's uncertain position on net neutrality and the Supreme Court's pondering of Aereo, the upstart operator of an online-subscription service that delivers over-the-air broadcast television to your favorite platform. The general picture is one of seismic changes in how news and entertainment are delivered, changes that may produce a further concentration of the country's telecommunications networks.
Sen. Al Franken (D-MN), struck quickly this morning, declaring that an AT&T-DIRECTV merger is likely to lead to higher prices, fewer incentives for better residential service, and the domination of the Internet by a few very large media companies.
"I'm skeptical that this deal is in consumers' best interests," Franken said in a statement. "We're moving toward an industry with fewer competitors -- where corporations are getting bigger and bigger and gaining more and more control over the distribution of information. This hurts innovation, and it's bad for consumers."
Todd O'Boyle, Common Cause's Program Director for Media and Democracy, argued that AT&T combining with DIRECTV will eliminate a choice on service for residents with access to AT&T's "U-Verse" package of digital TV, Internet and land-line telephone service. O'Boyle also raised concerns about residential pricing. According to a study by the media activist group Free Press, Comcast's "premium" TV packages increased 21% from 2009 through 2013, 17% at Time Warner Cable and Dish Network (DISH), 15% at Cablevision (CVC) and a comparatively small 8% at AT&T.
"I see nothing in this proposed merger that would lead us to believe that a combination of AT&T and DIRECTV will mean anything but higher bills for consumers," O'Boyle said in a phone interview.
Comcast's David Cohen, the company's point man on the proposed Time Warner Cable merger, said as much in February when that deal was announced, declaring that, "We're certainly not promising that customer bills are going to go down or even that they're going to increase less rapidly." Cohen told a Congressional committee earlier this month that consumers would benefit from more and faster services if not from lower prices.
For its part, AT&T is arguing that by merging with DIRECTV it can offer the satellite-TV provider's customers a broadband product that it may not be getting. Of course, their proposed merger could all blow apart if DIRECTV fails to sign a new Sunday Ticket deal with the National Football League. DIRECTV has said it expects to renew its Sunday Ticker contract by year's end. If the NFL doesn't renew that contract, AT&T has the right to terminate the merger proposal without paying a break-up fee.
John Bergmayer, an attorney at Public Knowledge, the Washington-based public-interest media law group, called on AT&T to demonstrate that a merger with DIRECTV would not harm wireless and video competition.
"The industry needs more competition, not more mergers," Bergmayer said in a statement. "The burden is on AT&T and DIRECTV to show otherwise. AT&T already has overwhelming spectrum holdings relative to most of the wireless industry. AT&T will need to explain how this merger wouldn't harm wireless competition, and how whatever new services it plans to offer by combining with DirecTV would offset any harms to wireless and video competition."
--Leon Lazaroff is TheStreet's deputy managing editor.
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