Purchase of wirelesss company could alter content distribution
As media and entertainment companies look at smartphones and tablets as promising new distribution platforms for their content, competition among wireless operators can only mean good things for the studios. More distributors equals more choices, and that equals better leverage to negotiate.
But the news on Sunday that AT&T is proposing to buy T-Mobile for $39 billion, a deal that, if approved, would leave just three large wireless operators in the U.S., may result in more clout being handed to distributors in this nascent market.
That is why the cash and stock sale by Deutsche Telekom of T-Mobile to AT&T will certainly face harsh scrutiny by regulators in Washington, particularly since it would surpass Verizon with nearly 130 million subscribers.
“You could argue that taking a player out of the landscape, by merging two players, could give the broadband providers more pricing power, making it more expensive to consume mobile content,” said David Bank, an analyst at RBC Capital Markets.
The AT&T/T-Mobile deal too, will almost certainly shift attention to Comcast’s wireless strategy. As it competes against Verizon and AT&T in digital TV, broadband and phone services, the missing piece for Comcast is a strong wireless offering. The blogosphere on Sunday renewed the speculation that Comcast has faced for years,which is that it should buy Sprint.
A Comcast spokeswoman declined comment. A source close the company denied that Comcast had any interest in buying Sprint, which would drop to the No. 3 wireless operator if the AT&T and T-Mobile win approval.
At a recent investor conference, Comcast Cable prexy Neil Smit said Comcast would continue to pursue its wireless strategy by working with its partner, 4G mobile broadband operator Clearwire. But the company has faced financials troubles, and its CEO Bill Morrow resigned in the past two weeks. Sprint owns a majority stake in Clearwire.