AT&T defends value proposition of DirectTV merger
American telecommunications provider AT&T is defending its valuation of DirectTV as it attempts to purchase the company, but has come up against concerns that it would result in a monopoly and reduce competition. Still, AT&T says that move would deliver cheaper and faster Internet and television services for users.
The deal has sparked massive media coverage over what would be one of the largest mergers in television broadcasting in history.
AT&T is proposing a $48.5 billion merger deal with DirectTV, which was first announced in May, and now the two companies are pushing their case with the Federal Communications Commission (FCC) that the merger would actually increase competition in the market even as other companies argue it would reduce such competition.
"The rationale for this transaction is simply stated," per the documents filed with the FCC. "Through this combination, the companies will marry complementary assets to achieve what they could not achieve separately or through a contractual arrangement: a compelling bundle of video and broadband services."
The two sides are arguing that the merger would give them more mobility in negotiating better programming deals with channels, including Disney's ESPN or Viacom's Comedy Central, which have been taken off a few cable packages across the country in recent months over disputes with cable carriers.
However, neither AT&T or DirectTV said specifically that the merger would see a reduction in monthly fees or lower bills for consumers, but they instead argued that if the merger were approved, the companies would be able to deliver to customers "a better value than either company could do on its own."
AT&T did, however, allude to content costs being reduced.
"AT&T has only one reliable option to lower its content costs in a reasonable frame to compete effectively with Comcast: expand its customer base significantly," the company said.
With the FCC and the United States Justice Department currently looking into the merger bid, it appears that if approved, it would be a major coup for AT&T as it continues to move more and more into the television and programming sector in addition to its already massive wireless network across the country.
But the FCC still has to approve the merger, which analysts are currently on both sides of the coin over whether the merger will be allowed.