AT&T defends DirecTV acquisition to Congress, can't promise lower prices
AT&T (NYSE: T) CEO Randall Stephenson told separate antitrust subcommittees in both the U.S. House and Senate that his company's proposed acquisition of DirecTV (NASDAQ: DTV) would "put downward pressure on cable products--cable bundles, cable video and cable broadband" but stopped short of assuring elected representatives that prices would be coming down.
"I can't even tell you what the prices of these services will be six months from now, much less three years from now," Stephenson responded to questioning by Connecticut Democratic Sen. Richard Blumenthal, who said he was "very, very skeptical" about the claim.
DirecTV CEO Michael White further muddied the waters by telling the senator that "it's pretty hard to commit to lower prices on pure-play TV because of the price of content."
Aside from that, multiple sources report that the hearings seem to bode well for the proposed $48.5 billion acquisition of the nation's largest satellite TV provider and that the heavy lifting will not be approving the deal but what conditions will be placed upon the merging members. Those conditions would have to come from the Justice Department's antitrust division and the FCC, regulatory bodies that would probably accept recommendations from Congress.
The deal is not without opposition outside the federal government.
Ross Lieberman, senior vice president of government affairs for the American Cable Association (ACA), told the congressional committees that the deal threatened "hundreds of small and medium-sized multichannel video programming distributors (MVPDs)," the ACA said in a press release
"The proposed AT&T-DirecTV transaction will increase the incentive of DirecTV-affiliated programmers, especially RSNs, to charge higher prices to their rivals, including hundreds of small and medium-sized MVPDs," Lieberman said.
John Bergmayer, a senior staff lawyer at Public Knowledge, was even blunter, according to a New York Times story.
"This proposed deal fails the antitrust test, it fails the public interest test, and it raises many concerns. It's hard to accept AT&T's claims that buying a direct rival can be good for competition," he concluded.
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