AT&T and DirecTV to Merge

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2014 is going to see some huge telecom mergers. Among them is the deal between AT&T and DirecTV and has received a lot of attention. According to AT&T, the deal is going to be advantageous for the consumers because prices of bundled offers will go down. This will put the two companies in competition with other telecom giants including Timer Warner/Comcast.

It was in the past month that AT&T and DirecTV announced their plan to merge in a deal worth a massive $48.5 billion. The Department of Justice and FCC are reviewing the deal and are concerned because one of the involved companies is a major telecom company and the other is among the biggest satellite company.

AT&T told the press that their decision to merge will increase competition levels in the cable market. AT&T and DirecTV are two small cable companies and by combining their resources, they may get an edge in the industry. AT&T claims that since DirecTV does not offer any broadband and only satellite services, it may not get ahead in the race. Most of the consumers purchase bundled packages which cover costs for the internet, phone and TV. As of now, DirecTV does not offer these sorts of packages, but once the merger is complete, they will be able to.

So how does AT&T get to benefit from the deal? AT&T lacks an influence in the market, but once the deal is finalized, the prices of their bundled offers will go down, giving them a plus point. AT&T told the press that a single company cannot meet the needs of its consumers which is an efficient bundled package, offering high-speed broadband and great resolution videos. Together, DirecTV and AT&T can ensure this, but alone they cannot.

Compared to Comcast, AT&T does have less subscribers, but greater revenues. In 2013, the company made $128.8 billion while Comcast figures were $64.7 million.

When asked about the merger between AT&T and DirecTV, a representative of Comcast said that prices will neither go down nor will the pace of the increase slow down.

As of now, AT&T has their operations set up in 22 states, which is less than Comcast and Time Warner. After the merger, the combined company will be able to operate in 48 states.

Source: www.cnbc.com

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