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Reaction to AT&T/DirecTV Deal Varies

21 May, 2014 By: Doug McPherson

DALLAS – Pundits have wasted little time weighing in on what could become the fourth-biggest telecommunications merger in history: AT&T’s $48.5 billion bid for DirecTV, announced Sunday.

What’s more, AT&T-DirecTV would be the country’s No. 2 provider of TV services behind a combined Comcast-Time Warner Cable, whose deal is also awaiting regulatory approval. In sum, Comcast and AT&T would control more than half of the market for pay television.

AT&T’s existing television service, called U-verse, only has about 5 million subscribers, while DirecTV has more than 20 million.

Below are comments from analysts and insiders on the deal:

  • “This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes.” – Randall Stephenson, CEO, AT&T
  • “When I first heard the news, I was scratching my head. Satellite is kind of a doomed technology. I don’t see it being a long-term proposition.” – Jim Nail, Forrester Research analyst
  • “It positions them as probably the most complete integrated telecommunications provider in the U.S., because they can provide nationwide bundles that consist of voice, Internet and TV services.” – Roger Entner, wireless analyst
  • “Strategically, this makes a lot of sense for AT&T because adding satellite TV lets them go national with a video offering that matches their wireless reach.” – Jan Dawson, analyst, Jackdaw Research
  • “It’s kind of like trying to find a date before the prom. The more people get picked off, the more desperate everybody else becomes to try to find somebody they can go to the dance with. As you get fewer and fewer bigger and bigger players, there is less pressure on any of them to pass on any of these savings to consumers.” – Harold Feld, consumer advocacy group Public Knowledge
  • “The industry needs more competition, not more mergers. The burden is on AT&T and DirecTV to show otherwise.” – John Bergmayer, senior staff attorney, Public Knowledge
  • “I think it’s going to make DirecTV a much stronger competitor, and this is a marketplace where we want to see the level of competition strengthened.” – David Balto, antitrust attorney
  • “It just doesn’t make sense to me. AT&T would be better off buying Dish Network because of that company’s wireless-spectrum holdings.” – Jonathan Chaplin, analyst, New Street Research
  • “While this transaction has some strategic merits, it appears more to be structured to enhance AT&T’s financial position.” – Vijay Jayant, ISI Group
  • “It’s a huge transaction, but I think it’s very unlikely to change the landscape of pay TV very much.” – Craig Moffett, MoffettNathanson
  • “This is a terrific transaction for all involved: Enhanced choice for consumers coupled with increased value for both AT&T and DirecTV shareholders – a natural.” – Todd Combs and Ted Weschler, Berkshire investment managers, in a joint statement
  • “AT&T is indirectly making Comcast’s case to regulators that it should be allowed to acquire Time Warner Cable because competition is increasing.” – Peter Lauria, longtime media industry reporter
  • “Consolidation usually leads to higher fees for consumers and fewer choices. The fewer players there are in the space, I believe the worse it is for consumers. And my constituents in Minnesota will be paying more for cable. This is a bad trend.” – U.S. Senator Al Franken (D-MN)

There is one potential snag: Reuters has reported that if DirecTV can’t strike a deal with the National Football League to renew the satellite TV operator’s contract to offer the popular NFL Sunday Ticket football package, AT&T can pull out of the merger, according to a regulatory filing.

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