The proposed merger of AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV) will boost competition within the industry, which is beneficial to consumers, according to the public interest statement the two companies submitted to the Federal Communications Commission (FCC).
“The combination of AT&T and DirecTV will create a pro-competitive, integrated bundle of video and broadband services that provokes a beneficial competitive reaction from cable and results in a demonstrable overall net benefit to consumers,” explained the two companies.
Last month, AT&T Inc. (NYSE:T), the second largest wireless carrier in the United States, announced its agreement to acquire DIRECTV (NASDAQ:DTV), the largest satellite TV provider in the country, for $48.5 million.
AT&T – DirecTV merger: One reliable option to compete effective
The second largest wireless carrier emphasized that consumer demand for an integrated and efficient bundle of high-speed broadband and high quality video is increasing. AT&T Inc. (NYSE:T) alone or DIRECTV (NASDAQ:DTV) by itself will not be able to meet the needs of consumers, according to their statement.
Consumers will be able to save on bundled services including wireless, mobile phone service and television. AT&T Inc. (NYSE:T) argued that it does not have the ability to offer a bundle of such services because of its limited video footprint. On its own, DIRECTV (NASDAQ:DTV) cannot also offer bundled services. AT&T also said that it needs to combine with DirecTV to increase its competitiveness against its primary rivals: Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) and Time Warner Cable Inc (NYSE:TWC).
AT&T told the FCC that it “has only one reliable option to lower its content costs in a reasonable frame to compete effectively with Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK): expand its customer base significantly.”
AT&T – DirecTV merger: Disadvantaged position
Regulators are currently evaluating a $45.2 billion proposal from Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) to acquire Time Warner Inc (NYSE:TWX). AT&T argued that it will find itself in a disadvantaged position if the proposed merger of its competitors receives approval from regulators.
“Cable has long been the dominant provider of broadband and video services in the United States, and if the Comcast/Time Warner Cable/Charter transactions are completed, that dominance will swell even further,” according to AT&T Inc. (NYSE:T)
AT&T’s promise
AT&T Inc. (NYSE:T) promised the FCC that it will continue to provide consumers with a reasonable market-based price for broadband internet service and that it will offer satellite video service at a standard nationwide price for three years if regulators approve its merger with DIRECTV (NASDAQ:DTV). The company also restated its commitment to follow the agency’s rules on net neutrality. In addition, AT&T said it will expand its broadband services to 15 million customers in rural areas following the approval of the merger.