The planned merger between communications giant AT&T and satellite television provider DirecTV appears to be moving ahead with little opposition.
On June 12, the Chairman of the House Subcommittee on Communications, Greg Walden (R-Ore.) told The Hill newspaper in Washington that he has no plans to hold hearings on the merger. While House Judiciary Committee Chairman Bob Goodlatte (R-Va.) has said that his committee would hold hearings on the proposed merger, no hearings have been scheduled to date.
Meanwhile, the Senate Judiciary Committee has said that it would hold hearings on the proposed merger in the afternoon of June 24. Some rumors on Capitol Hill suggest that the House hearings may happen that morning, but there is no confirmation from the committee.
The action to announce hearings in the Senate came on the same day that AT&T and DirecTV formally filed their application for license transfer with the FCC and the agency issued its required public notices as to procedures for the application process. The FCC also opened Docket 14-90 in regards to the application. The opening of the docket also means that the FCC is opening its public comment period regarding the proposed merger.
Right now, there seems to be little interest in the merger among public interest groups or others that generally get involved with major communications mergers. On the face of it, the combination of the two companies does not appear to be anti-competitive, and the two companies have little overlap in their operations. It is likely, in other words, that the merger of these two companies will sail right through the approval process.
Of course, there will be a few concessions required by the FCC on the part of AT&T, which will be the surviving corporation. Sensing this, AT&T has already said it will divest itself of América Móvil, a wireless company in Mexico. The merged organization will likely be required to maintain its quasi-bundling relationship with Verizon and Comcast. (Both can resell DirecTV as part of a bundle.)
Considering it’s such a big merger, bigger than Time Warner and Comcast in terms of dollars, why so little action? It’s probably because there’s really not much about it that’s anti-competitive. Unlike AT&T’s failed merger with T-Mobile, the two companies don’t have competing wireless networks. While AT&T does provide cable and landline service in the United States, that doesn’t directly compete with anything DirecTV does.
On the other hand, given the proposed Comcast-Time Warner merger, what AT&T is planning actually makes some sense. The merger with DirecTV will give AT&T some scale and some access to media that can compete with TW.
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In fact, by allowing the AT&T-DirecTV merger to go through, the FCC then has a reason to allow the Comcast-Time Warner merger. Each company will compete with the other, but may be different enough not to be able to set up some sort of anti-competitive cartel.
Perhaps equally important, AT&T has pledged to support the FCC’s Open Internet guidelines as they were before the federal courts overturned them early in 2014. Considering the commission’s unhappiness with the current state of IP interconnection and streaming deals between NetFlix and Comcast and Verizon, in which the FCC is examining charges that cable companies are disrupting streaming programs from NetFlix, the agency may be looking for a good example.
Some have suggested that the AT&T-DirecTV deal may be a problem for cord-cutters, but looking at the company’s proposals, even that may not be an issue. In its press releases by DirecTV announcing the merger, the company promised to provide stand-alone broadband service specifically for Netflix users. Promises made by the companies include an expansion of broadband services and a net neutrality commitment.
AT&T for its part has filed public interest statements with the Securities and Exchange Commission explaining why its merger with DirecTV is officially a good thing. What AT&T is saying is that customers frequently want to bundle their television and broadband, which is probably true. The company is also pointing out that the merger will lower costs in the combined company, improve diversity and provide access to bundled wireless services.
What the documents don’t say, but which will be important to AT&T in the long run is that the merger will do a lot to expand AT&T’s business into Latin America, where DirecTV is by far the leading satellite television provider. Considering that much of Latin America is poised for explosive growth in both its business and consumer sectors, this is a smart move on the part of the wireless giant.
Considering that this is a nearly $49 billion dollar merger, is it really as benign as it seems? For the most part, it seems that it likely will be. There aren’t any markets where AT&T will be the only company around.
There’s plenty of TV service competition in the areas where AT&T will be doing business, and the company isn’t on its way to putting other wireless companies out of business. While Dish Networks may complain if it turns out that the newly merged DirecTV seems to become stronger in a hurry, that in itself is not likely to be much concern to the FCC or to the Justice Department.
In short, it looks like the merger will be a fait accompli as it goes through the regulatory process.