Proponents and opponets of AT&T's $48.5 billion proposed purchase of DirecTv square off before a Congressional anti-trust panel. Bobbi Rebell reports.
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Not all mergers are the same- said the leaders of AT&T and DirecTV.
In a hearing before a House Judiciary Committee, AT&T CEO Randall Stephenson said unlike the other alliances shaking up the telecomm industry- including Time Warner's deal with Comcast- and Sprint's potential bid for T-Mobile- their deal is complimentary, because the companies provide different services.
SOUNDBITE: RANDALL STEPHENSON, CEO, AT&T (ENGLISH) SAYING:
"This transaction is unlike most mergers because it primarily combines companies with complimentary products and capabilities: DirecTV 's premier pay TV service and AT&T's broadband service."
Stephenson argued they need to merge to compete with the cable companies, and added that the economics of the deal would allow them to bring better internet service to rural areas.
DirecTV CEO Michael White stressed the high costs they faced:
SOUNDBITE: MICHAEL WHITE, CEO, DIRECTV (ENGLISH) SAYING:
"When 60 percent of your costs are the content that you distribute, I mean, we are just a distributor, and seven companies control 75 percent of our content costs. So, we are already in a world of dealing with big scale providers of content."
But consumer advocates raised red flags about industry consolidation- warning content providers and consumers may face higher prices- despite the CEO's reassurances.
Ross Lieberman of the American Cable Association- talked about how consumers could be hurt as smaller cable operators try to compete.
SOUNDBITE: ROSS LIEBERMAN, VP, GOVERNMENT AFFAIRS, AMERICAN CABLE ASSOCIATION (ENGLISH) SAYING:
"The rising prices that they will see, that their service providers who are not DirecTV have to pay for DirecTV programming. And I think, number two concern, that they would have is just the increasing pressures the decreasing competition that smaller providers can provide as a result of the increasing consolidation that is happening in the marketplace, not only due to AT&T DirecTV, but also Comcast-Time Warner Cable."
John Bergmayer of the non-profit advocacy group Public Knowledge- also raised questions about net neutrality- specifically whether AT&T could give its own content preferential in getting to customers faster:
SOUNDBITE: JOHN BERGMAYER, SENIOR STAFF ATTORNEY, PUBLIC KNOWLEDGE (ENGLISH) SAYING:
"AT&T plans to create a new online video service. AT&T should be free to enter this market. But it cannot take advantage of its position as an internet service provider to favor its own services, at the expense of competition."
Ultimately, while lawmakers can be a major influence, it will be the Justice Department that decides whether to approve the deal.
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