Sen. Bernie Sanders urged the Department of Justice to block AT&T Time Warner merger and that the merger “would almost certainly lead to price hikes and reduced choice.” He pointed to the purchase of DirecTV by AT&T as an evidence to prove his point.
Regulators approved the sixty seven billion acquisition with some conditions, and said that the merger would lead to increased competition for the cable companies and will offer more options to the users. However, Sanders said that AT&T’s purchase of DirecTV fallen short.
“AT&T claimed that such a deal would benefit consumers,” Sanders wrote to a top federal antitrust official. “Less than a year later, these benefits are nowhere to be found, and AT&T raised prices for DirecTV services.”
AT&T has now agreed to buy Time Warner Inc, but it will require a federal regulatory review, which may take about a year to complete. The federal commissions review team will debate on many issues, which included concentration of power, privacy protection, and preferential treatment.
Nevertheless, AT&T’s addition of DirecTV should not be cast as a warning sign and the results are positive so far, both for the company and for the consumers. AT&T has introduced many aggressive plans that also include a package with TV and wireless on one bill. This plan could save a total of six hundred dollars a year.
In January, an unlimited wireless plan with video was introduced which attracted about seven million subscribers. NFL Sunday Ticket free streaming was also added together with deals for college students. In the month of September, the DirecTV app was updated to include mobile DVR capabilities. All this, together with the marketing push by AT&T paid off as customers.
Statistics shows that DirecTV added 1.2 million subscribers in September, which is an increase of more than six percent. The importance of this increase is that it appears at a time when the pay TV industry is shrinking, meaning that DirecTV is grabbing market share.
“Consumers are voting with their feet,” said Christopher Yoo, a law professor at the University of Pennsylvania. He said that it is easy to say that a big merger will harm the consumers, but the best way to judge that is to see if they are buying the product. Yoo also added that the subscriber numbers suggest that DirecTV merger is good for the viewers.
“Certainly, it’s allowing AT&T to compete more effectively with cable, and they’re also innovating with new packages and pricing,” Yoo said. “That’s another sign of a competitive market.”