Antitrust experts: 2 big deals better than 1

Published on NewsOK Modified: May 20, 2014 at 12:35 pm •  Published: May 20, 2014
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LOS ANGELES (AP) — Antitrust experts say AT&T's bid for DirecTV could reap immediate regulatory rewards. Coming so quickly on the heels of a rival cable company merger —the pairing of Comcast and Time Warner Cable— makes it easier for regulators to approve both transactions because they create two counterbalanced giants in pay TV.

Experts say the potential benefits of bigger scale, cost savings and promised reinvestment in networks to create speedier connections could be seen to outweigh the damage done to consumers by a reduction in the number of competitors.

"The antitrust regulators might be thinking about Comcast-Time Warner Cable becoming a Goliath with lots of small Davids," said Amanda Wait, a former antitrust attorney with the Federal Trade Commission and partner at Hunton & WiIliams LLP in New York.

"What the AT&T deal does — if it gets approved — is it creates another strong competitor that looks more like a Goliath than a David. It levels the playing field a little bit," she said.

Even so, each deal brings a unique set of potential harms. For a quarter of the nation's households, AT&T Inc.'s combination with DirecTV will reduce the number of pay TV competitors from four to three, which raises the possibility that consumers will face higher prices in those markets.

Meanwhile, Comcast Corp. and Time Warner Cable Inc. will serve 30 million Internet subscribers, a figure that is growing. That's roughly double the size of its nearest competitor — AT&T with 16.5 million — and could give it an unprecedented ability to charge content providers for priority access to its subscribers under new Internet rules being considered by regulators.

Both entities' TV services would be roughly the same size — AT&T-DirecTV will have 26 million pay TV subscribers, Comcast-Time Warner Cable, about 30 million.

Although each deal will be examined on its own by the Federal Communications Commission and the Department of Justice, regulators look at the current and future marketplace, according to DOJ spokeswoman Gina Talamona.

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