There have been a lot of mergers and acquisitions in the telecom businesses, the Comcast-Time Warner Cable merger is still up in the air and many people appear to be highly opposed to it. And naturally, it would come as little surprise that AT&T would look to merge/buy one of their competitors as well. After all, if a Comcast-Time Warner Cable merger were to go through, even after divestments they would essentially be a 30 million subscriber base company. That would be much bigger than AT&T’s current 5 million subscriber base, making them even less relevant in the TV space, so obviously, AT&T wants to expand their business size and their relevance in the TV business and they can’t do it with their subpar product and pricing. So what do they do? Acquire! Just like Comcast. So, AT&T would gobble up DIRECTV’s 20 million+ subscriber base and instantaneously become a real competitor with the potential Comcast-Time Warner Cable behemoth.
This would effectively leave consumers with 3 choices in TV, Comcast Time Warner, AT&T DIRECTV or DISH. The next biggest competitor would be Charter, whom would only be around 7 to 8 million subscribers, half of which had been divested to them by Comcast in order to make regulators happy about their acquisition of Time Warner Cable. And since we all know that none of these cable companies really compete with eachother, you’d realistically be dwindled down to a MUCH smaller group of companies to choose from. Not just that, but you’d also have fewer companies competing with each other for price which means that we would most likely get even worse levels of service for more money than most of us are already paying today. In fact, AT&T’s merger with DIRECTV actually makes more competitive sense than Comcast’s acquisition of Time Warner Cable. This is primarily because AT&T is a fairly small player in the TV market with their UVerse service and DIRECTV doesn’t really serve very many users with internet. Plus, it would also put AT&T into the number one spot, eclipsing Comcast as the number one pay TV provider, which could actually spur some sort of competition, even though that’s very unlikely in today’s cable climate.
Ultimately, these mega mergers are a perfect example of the lack of competition in the market and the fact that these big companies are merely existing to get bigger and more monopolistic. None of these companies have really shown any good will towards customers and AT&T and Comcast are some of the most hated companies in existence today. I simply don’t see how current or future DIRECTV customers would benefit from having AT&T acquire the company, and the same goes for AT&T customers. This merely seems like a marketshare grab in order to gain favorable program pricing and expand their TV business without actually competing. In fact, AT&T is the only TV and internet provider that overlaps with many of the cable providers like Comcast, Time Warner Cable and Comcast because they are technically a phone line provider (DSL) and are not technically a cable operator. However, AT&T never chose to compete with the cable operators and instead decided to offer slower internet speeds for more money than their competitors and more TV channels that nobody wants to watch.
DIRECTV’s stock [NASDAQ:DTV] is up over 5% or nearly $5 on the news and will likely continue to move upward as more information on the deal comes out.