AT&T and DirecTV, who will benefit? Posted on 10 Jun 18:01 , 0 comments

AT&T has finalized a deal to acquire DirecTV for $94 per share — the purchase price would exceed more than $48 billion and create a pay-TV powerhouse similar in scale to the proposed merger between Comcast and Time Warner. DirecTV is the nation’s No. 1 satellite TV provider. The merger with AT&T would allow for bundling of mobile, TV and Internet services, and directly respond to the needs of 26 million video users in the United States.

Why Merge?

There are both financial incentives and practical consumer driven reasons why the merger between AT&T and DirecTV makes good business sense. For AT&T, the merger provides AT&T with the means to further improve its bottom line and stock price. The deal provides AT&T and DirecTV with the cash flow needed to expand services and respond to growing consumer demands. Today’s consumer has an increasing expectation and desire for more content at anytime, anywhere, and across an array of electronic devices.

What does the merger mean for consumers?

The deal between AT&T and DirecTV will likely not be beneficial for consumers. Currently, consumers can go to different content providers to get all the services they want. While this deal would allow them to access all the content in one place, it will likely lead to increased prices and decreased choices as competition will necessarily be decreased as a result of the merger. AT&T, as a carrier, has some control over the companies with which it claims to compete, such as Netflix, Amazon, and Google. These competitors are not able to reach their customers unless AT&T and other cable and internet providersremain a platform to deliver that content. The growth AT&T would see through this deal would allow it to exert even more influence over how consumers reach those other content providers.

While this deal is advantageous for AT&T, it still must go through regulatory approval by the FCC before being finalized . However, it turns out, this is an interesting one to watch.

See PBS article here: http://www.pbs.org/newshour/bb/att-directv-merger-affects-consumers/