AT&T And DirecTV Mega-Merger Spells Changes For Media Landscape

AT&T's $49 billion acquisition of DirecTV now faces regulatory scrutiny. Meanwhile, a deal merging Comcast and Time Warner Cable is also in the works. Consumer advocates worry about consolidation, but many observers think the deals could hold down costs for the merged companies.

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Federal regulators are facing a decision on whether to allow another big media merger. This time, it's AT&T and DirecTV. Yesterday, the board of AT&T voted to acquire the satellite television company in a deal worth almost $50 billion. NPR's Jim Zarroli reports that the hope is to be a stronger competitor against the likes of Verizon and Comcast.

JIM ZARROLI, BYLINE: Like other big media companies, AT&T has been desperately trying to tell the future of the media business and get ready for it. CEO Randall Stephenson made clear today that he believes the future lies in video. Customers are increasingly turning away from cable and satellite companies and watching video over various digital devices. Stephenson spoke on a conference call with analysts.

RANDALL STEPHENSON: Just like the last six, we're about delivering large amounts of data over these networks. The next six years is going to be about delivering video. That was, frankly, the key rationale for trying to do something with DirecTV.

ZARROLI: Buying a satellite TV company might seem to be an unlikely way of preparing for the future but the deal is meant to help AT&T bulk up for the new video age and become a much stronger and more powerful media player. It will have access to 20 million new paying TV customers in addition to the six million it already has. It will be able to offer them lucrative bundled packages of mobile, Internet and video services. Blair Levin is a former FCC official now with the Aspen Institute.

BLAIR LEVIN: It's not about growth. It's about revenues. It's very profitable. And it does cover a lot of the country for video that AT&T wire line services do not cover. And so this gives them the ability to have a nationwide video offering.

ZARROLI: The merger will also make AT&T a much bigger player in the media business. It will be able to sit down with content providers and negotiate better deals for movies and TV programs. The deal comes on the heels of another big proposed merger between Comcast and Time Warner Cable. Tim Karr, senior director of strategy for the advocacy group Free Press, says these mergers are costing big media companies a huge amount of money.

TIM KARR: You include the massive amount of money that Comcast is wanting to spend on Time Warner Cable, these companies could easily deploy super-fast gigabit fiber Internet services to every single home in America.

ZARROLI: Karr says mergers like the one announced this weekend will leave a marketplace dominated by a few super-large players and that won't be good for consumers. But Blair Levin says a lot of other things are happening that could reshape the media landscape, like the debate over open Internet rules and the sale of more wireless spectrum. And regulators will have to factor in all these changes as they decide whether to approve the merger.

LEVIN: In this particular case, you have multiple deals, you have multiple changes in technology happening and you have multiple regulatory things going on. So, I think it's a very, very tricky thing.

ZARROLI: Meanwhile, he says, competitors such as Amazon and Google are designing new technologies that could further reshape the media business. Levin says it will be up to federal regulators to balance concerns about competition with company desires to grow bigger, a task that promises to be challenging. Jim Zarroli, NPR News, New York.

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