AT&T, DirecTV claim net benefit to consumers from merger

AT&T, DirecTV have told the communications regulator their merger would result in ''a demonstrable overall net benefit to consumers.''

The companies said in a statement to the Federal Communications Commission (FCC) on Wednesday the $48.5-billion AT&T-DirectTV merger, announced last month (See: AT&T to buy US satellite-television provider DirecTV for $48.5 bn), would benefit consumers by posing a substantial competition to cable giant Comcast and other pay-TV providers.

Making a case for the merger, AT&T and DirecTV said in a public interest statement that the merger would result in the creation of "a pro-competitive, integrated bundle of video and broadband services."

Asserting that the pro-competitive services would trigger a "beneficial competitive reaction" from cable and pay-TV providers, AT&T and DirecTV said that their merger would eventually bring about "a demonstrable overall net benefit to consumers."

The companies further said the bigger distributors could generally manage to get better rates for carrying popular channels like Disney's ESPN or Viacom's Comedy Central - as compared to smaller distributors. They said the size of their merger would give them more clout to strike better negotiations with programmers.

Though AT&T and DirecTV were silent about how their merger would lead to lower bills for consumers, the two companies said if they got the approval for the merger, they would be able to offer consumers "a better value than either company could do on its own."

The companies further promised lower pay TV prices, greater broadband availability in rural areas and extended compliance with 2010 net neutrality legislation.

The development comes a week after AT&T told its investors that the merger would cut content acquisition costs by 20 per cent.

According the claims of the companies, the move would lead to merging complimentary assets, and spurring far greater competition in the consolidated MVPD market as a whole than as stand-alone entities.

"This merger occurs against the backdrop of fundamental shifts in the ways consumers obtain broadband and video services…Through this combination, the companies will marry complementary assets to achieve what they could not achieve separately or through a contractual arrangement: a compelling bundle of video and broadband services," AT&T's FCC filing reads.