Market Overview

AT&T And DirecTV Merger Is 'Bad For All Consumers'

AT&T And DirecTV Merger Is 'Bad For All Consumers'

AT&T (NYSE: T) plans to purchase DirecTV (NASDAQ: DTV) for $48.5 billion.

In a press release, both companies brag that it will create a "content distribution leader" across mobile, video and broadband.

AT&T Chairman and CEO Randall Stephenson referred to the merger as a "unique opportunity that will redefine the video entertainment industry."

In the same release, DirecTV President and CEO Mike White said that the merger would bring "significant benefits" to consumers, shareholders and DirecTV employees.

"U.S. consumers will have access to a more competitive bundle; shareholders will benefit from the enhanced value of the combined company; and employees will have the advantage of being part of a stronger, more competitive company, well positioned to meet the evolving video and broadband needs of the 21st century marketplace," he said.

Related: Comcast-Time Warner Merger Should Be 'Dead On Arrival,' Says Former FCC Commissioner

Shares of DirecTV rose more than 31 percent over the last six months, which is significantly higher than AT&T's performance (up 2.86 percent) over the same period.

The merger might temporarily benefit investors, but will it really have a positive impact on consumers?

"For any consumer that's in the area where U-verse already operates, there's one less choice," Todd O'Boyle, Program Director for the Media and Democracy Reform Initiative at Common Cause, told Benzinga. "So that's bad for all consumers. Less competition means less choice, [which] means higher prices.

"More broadly, all of these companies -- particularly on the telecom side -- have a history of unseemly influence peddling in Washington. Allowing them to get bigger only makes that problem worse."

Common Cause is a nonpartisan, nonprofit advocacy organization. The organization came into the spotlight after Michael Copps, a former FCC Commissioner, joined as the special advisor to the Media and Democracy Reform Initiative.

"I don't see any compelling reason why AT&T should be allowed to get bigger by purchasing DirecTV," said O'Boyle. "For the oft-rumored merger between Sprint and T-Mobile, again, I don't see how taking choice away is going to help consumers."

Ultimately, O'Boyle believes that this is the symptom of a much larger problem -- a problem he refers to as "merger madness."

"This isn't 'merger mania,' it's madness," he said. "One inconceivable deal gets put on the table, and that makes the next inconceivable deal all the more likely. These things happen in waves. There's nothing about this that does anything for the public interest. There's nothing about this that's going to help consumers or make the media more vibrant or local or diverse."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.


Related Articles (T)

View Comments and Join the Discussion!

Posted-In: AT&T comments Common Cause DIRECTV Michael Copps Mike White Randall StephensonTech Best of Benzinga