On Sunday, AT&T said it had agreed to acquire satellite television provider DirecTV for approximately $48.5 billion. The communications giant already provides TV, phone, and internet services in many markets across the country, but it has historically been a small player in the paid-TV market. If this deal is approved by regulators, AT&T would become the second largest paid TV provider, after cable giant Comcast.
It would also be the first step towards AT&T offering TV services over the internet. Recode reports that AT&T CEO Randall Stephenson told investors during a conference call today that the company will use DirecTV’s entertainment industry relationships to aid its efforts to create new cross-platform video services.
The upside of the deal is that A&T may soon offer you all the communications and media services you need, from wireless phone service to fixed-line internet to satellite television. You could get everything on a single bill. But in the long term, the merger may end up hurting you in unforeseen ways. It’s another sign that a shrinking number of companies are controlling access to a growing number of information services. That could ultimately hinder market competition, and as this world evolves in such rapid fashion, it’s hard to see how the reduced competition will play out.
The Wild Card
Industry experts expect the DirecTV deal to be approved, but recent history doesn’t provide a clear precedent for how this will be handled. The general trend is towards more consolidation. Although AT&T was broken up into seven different companies in 1983, many of the so-called “Baby Bells” have merged, leaving just a few large players, including AT&T, Verizon, and CenturyLink. And the cable television industry is consolidating in similar ways. Comcast just recently agreed to acquire Time Warner Cable, one of its biggest competitors. That said, FCC has blocked certain mergers. In 2001, regulators blocked EchoStar–which at the time owned the Dish Network, DirecTV’s largest satellite television competitor–from acquiring DirecTV. And AT&T was blocked from acquiring T-Mobile in 2011.
But the wild card here is that the phone and internet and TV markets are now merging as well. The Baby Bells are no longer separated from the TV giants.
