Two Mega Deals Are About To Make US Paid TV A Lot Worse

Charlie sheen directv commercialDirecTVCharlie Sheen in a DirecTV commercial.

AT&T’s reported $US50 billion acquisition of DirecTV hasn’t raised the same kind of stink as Comcast’s impending purchase of Time Warner, but it should.

Here’s a quick refresher: According to multiple news reports from publications like Reuters, The Wall Street Journal, and Bloomberg, AT&T is trying to buy DirecTV for about $US100 per share, or the equivalent of about $US50 billion. That’s $US5 billion more than what Comcast wants to pay for Time Warner Cable. If DirecTV accepts the offer, we should get official word within about two weeks.

But the AT&T deal is arguably more dangerous for proponents of competition in paid TV and a free and open internet than the Comcast deal. That’s because it’d be counter to the biggest reason why Comcast thinks its acquisition of Time Warner Cable is legal.

According to Comcast, it’s not an anticompetitive move to purchase Time Warner Cable because the two companies don’t directly compete in the markets they currently serve. (That argument is also bogus. In fact, Comcast listed Time Warner Cable as a competitor when it was trying to buy NBC Universal a few years ago. But let’s tackle that another time.)

DirecTV is a satellite service that’s available just about anywhere in the US, including markets where AT&T’s paid TV service called U-Verse already exists. If the Department of Justice allows Comcast to buy Time Warner because the two don’t compete in the same markets, how can it justify doing the same for AT&T, which does compete for the same customers as DirecTV?

On the other hand, AT&T will have some leverage. Assuming the Comcast-Time Warner deal goes through, and it almost certainly will, AT&T can use that merger to argue that it will provide a counterweight to the inevitable Comcast behemoth.

That’s not a good thing. It’d consolidate a lot of the power of paid TV and broadband internet in two companies: AT&T and Comcast. Those companies will have a lot more leverage when negotiating pricing for content and advertising, which could result in higher prices for you.

It will be interesting to see how AT&T decides to spin this if and when it formally announces the deal.

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