In the wake of the pending Comcast-Time Warner Cable (TWC) consolidation, another Internet service provider is reportedly hammering out a deal with a TV satellite company to form a giant so big it could give the future Comcast-TWC merger a run for its money.
The Wall Street Journal (WSJ) cites unidentified sources reportedly familiar with the situation who said AT&T approached DirecTV to begin talks about a possible acquisition of the satellite business.
The deal, if approved, will likely cost AT&T at least $40 billion, which is DirecTV's current market capitalization, as per WSJ. It will also give the consolidated company around 26 million subscribers, which is only slightly below the 30 million subscribers purported to belong to the Comcast-TWC behemoth should the deal take place.
AT&T and DirecTV currently have a joint venture to provide a co-branded suite of satellite TV, broadband and voice services to places not covered by AT&T's U-verse until 2015.
Last month, rumors were rife that DirecTV was on the negotiation table to merge with Dish. DirecTV chief executive Mike White, however, was not enthusiastic, citing an earlier attempt to consolidate with Dish which was thwarted by the Federal Communications Commission (FCC).
AT&T representatives were unavailable for comment, while DirecTV spokesperson Robert Mercer said he does not comment on speculation.
If the government gives the green light on both mergers, the United States will have two colossal firms taking over huge portions of the Internet and TV industries. T.C. Sottek of The Verge, pictures a satirical doomsday scenario where Comcast and AT&T cable-ize the Internet of the Future.
"Netflix is a lot more expensive than it used to be, and while you still don't really want to buy cable TV, paying for Internet is basically the same thing these days. Want to read ESPN, the New York Times, and a couple hundred other websites you don't care about? There's a package for that. Want to watch videos on YouTube or download music from iTunes? There's a package for that, but you're already paying too much for Netflix," Sottek writes.
Although Comcast chief executive Brian Roberts insists that the merger with TWC is "pro-consumer" and "pro-competitive," concerns similar to Sottek's have been raised by antitrust regulators and advocacy groups that are wary of the growing market power of companies like Comcast and AT&T.
"It's broadband. It's broadcast. It's content. It's distribution. It's the medium and the message. It's telecom, and it's media, too. And it just would confer a degree of control over our news and information structure that no company should be allowed to have," says former FCC commissioner Michael Copps in an interview, who now heads the Media and Democracy Reform Initiative at Common Cause.
In the hopes of winning over antitrust regulators to approve its bid to purchase TWC, Comcast recently agreed to a three-part deal with Charter, which will reduce Comcast's subscriber base to 29 million, well below the subscriber cap enforced by the government to ensure competition.