Boston, MA 06/25/2014 (wallstreetpr) – AT&T Inc. (NYSE:T) on Tuesday told the U.S. lawmakers that it cannot guarantee that its proposed acquisition of the nation’s largest satellite television provider, DIRECTV (NASDAQ:DTV), will lead to lower prices for the consumers.
Since the company announced $49 billion acquisition offer for Direct TV, there have been several debates among lawmakers, consumer lobby groups and the public about the potential impact of the deal. There have been particularly a lot of concerns over less competition and higher costs to consumers.
Executives on the deal
However, the companies maintain that their marriage will result in quality services and slow increase in prices for consumers. Moreover, the companies will also improve their standing against competitors. According to the executives of the two companies one particular area that the deal will help them is in negotiating for lower costs in content acquisition. That has been an area through which they lose a lot of money or even threatens to make their services and those from competitors more expensive in the near future.
Although the lawmakers appear influential in determining the fate of such deals, they lack a formal role in the deal, and only the Justice Department will have to approve or decline the deal.
Adjusting to threats and opportunities
Several deals have been declared in the U.S. telecom and Internet industry in recent times and the planned merger of AT&T Inc. (NYSE:T) and Direct TV is just one out of many. The carriers Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) are also plotting a merger that would reduce the number of top U.S. carriers to only three if the deal is successful. The merger between TMUS and Sprint would also come as an added disadvantage to AT&T Inc and Verizon Communications Inc (NYSE:VZ), which are the front runners in the telecom industry.
Comcast Corporation and Time Warner Cable Inc are also pursuing a merger deal in which $45 billion is being offered towards the combining of a giant cable and Internet providers.
Threat at hand is Google
As for AT&T Inc. (NYSE:T), the move to seek a deal with Direct TV appears to be informed by the advancement of Google Inc (NASDAQ:GOOG) in Kansas City through Google Fiber project, which is a disruptive broadband technology that could squeeze the life out of U-verse.
