Earlier today Rep. Doris Matsui called for a Congressional hearing on the proposed deals between Comcast and Time Warner Cable, and AT&T and DirecTV. The massive deals would further consolidate the pay-TV and broadband industries.
The proposed transactions are quite controversial. The arguments are the usual fare: Allowing the firms to combine will allow for efficiencies to be exploited, as well as more unified investment. On the other side, allowing for greater consolidation of pay-TV and broadband-providing firms lessens competition and raises antitrust concerns.
Rep. Matsui isn’t the only member of Congress who thinks that the deals could lead to higher prices for consumers. Senator Al Franken recently argued that the AT&T-DirecTV deal would lead to larger bills that his constituents would have to bear.
Referring to the proposed transactions as “some of the largest mergers in our nation’s telecommunications history,” Rep. Matsui argues that the party companies “need to demonstrate that these proposed mergers will not leave consumers with less choice and higher costs.” The representative did note that the FCC is “scrutinizing” the deals, but that there is room for Congress to have a “primary oversight role,” as well.
The Comcast-Time Warner Cable deal tips the scales at $45.2 billion. AT&T and DirecTV is a deal worth $48.5 billion, not including the latter’s accumulated debt. AT&T expects its deal to take a year to close, so the timeframe that we are on isn’t massively accelerated.
Could the deals be stopped? AT&T’s purchase of T-Mobile was blocked in 2011, though the bones of that transaction were different, of course. Congressional hearings would at least provide a forum for fair concerns to be aired and answered. Given the scale of the deals, that can’t be anything but good.
(That failed T-Mobile deal cost AT&T dearly, given a $6 billion breakup fee. This time, if the AT&T-DirecTV deal fails, AT&T will receive $1.4 billion from DirecTV.)