Last year, two major deals took the attention of the business world – particularly those involved in media buying, advertising and digital media.
Comcast announced its $45 billion purchase of Time Warner Cable. Just three months later AT&T revealed that they would be taking over DirecTV for $48 billion. While both deals would transform the media landscape, only the Comcast-Time Warner deal seemed to garner public outcry over monopoly worries and regulatory tangles. That deal fell apart shortly afterwards.
AT&T, DirecTV Being Scrutinized
The AT&T-DirecTV deal seemed to escape the same scrutiny – until now. If this deal is approved, it would create the country’s largest television distributor with 26 million subscribers. It would far surpass Comcast in terms of subscriber numbers, and has other media companies worried. In fact, Netflix Inc. formally urged the Federal Communications Commission (FCC) to reject the deal as it is currently set up.
“Such market power creates new incentives and abilities to harm entities that AT&T perceives as competitive threats, and will exacerbate the anticompetitive behavior in which AT&T has already engaged,” Netflix stated in the FCC filing.
AT&T, however, is nowhere close to being the leader in broadband service. It has 16.1 million Internet subscribers, and DirecTV has none. Comcast, in comparison, has 22 million high speed customers.
Netflix Opposes The Deal?
Later, a Netflix spokeswoman stated that the company didn’t oppose the deal outright, but would encourage the FCC to review and regulate the deal. A spokesperson from AT&T declined to comment. Michael D. White, chief executive of DirecTV said in an earnings call with investors this month that “We feel very, very strongly that there are both significant consumer and competitive benefits to our transaction.”
Currently, federal regulators are dissecting more than 7.5 million pages of documents, hundreds of white papers and hours of testimony from company executives in order to evaluate the proposed deal. They will use this analysis to determine whether the joining of AT&T and DirecTV will serve the public interest.
Both companies have stated that they are confident that the deal will close by the end of June.