AT&T chairman and CEO Randall Stephenson, in scheduled appearances on Capitol Hill on Tuesday with DirecTV chairman and CEO Michael D. White, plans to tell lawmakers that their proposed $49 billion merger may lead to lower prices for consumers across the marketplace.
But the heads of AT&T and DirecTV will be joined by a number of critics, including Chris Keyser, president of the Writers Guild of America West, who plan to warn of diminished competition and a stifling of choices for the creative community.
The House and Senate Judiciary subcommittees that oversee antitrust law are scheduled to hold back-to-back hearings on Tuesday.
“By integrating DirecTV’s video capabilities with our strength in fixed and mobile broadband delivery, we will create a new competitor with unprecedented capabilities,” according to Stephenson’s testimony. “And, the substantial cost savings and other synergies associated with the transaction will allow us to price all of our services more competitively, which will drive cable and other competitors to lower their prices and improve their own offerings.”
He also plans to tell the committee that the combined company “would expand or enhance” high-speed broadband service to at least 15 million customers, mostly in rural areas, within four years after the deal closes.
The Department of Justice and the FCC are tasked with greenlighting the transaction, but Congress has an oversight role as regulators review whether to approve it.
Also scheduled to testify at the House hearing are Ross Lieberman, senior VP of government affairs for the American Cable Assn., who plans to warn the subcommittee that the transaction “will increase the incentive of DirecTV affiliated programmers to charge higher prices to their rivals, including hundreds of small and medium sized” multichannel distributors. He plans to say that consolidation in the industry — including the proposed Comcast acquisition of Time Warner Cable — shows a need for Congress to review rules and regulations “so the new market order does not harm consumers by hindering the ability of firms other than the merging parties to compete effectively.”
Also on the panel will be John Bergmeyer, senior staff attorney at Public Knowledge, who plans to point out that the merger would remove a pay-TV competitor in many local markets, and AT&T’s plans to do “some limited price matching” for three years will be only temporary relief that “cannot overcome the harm to consumers.” He also plans to tell the committee that AT&T has a “habit” of presenting existing business plans for infrastructure upgrades as merger commitments.
Stephenson and White will then appear at a Senate antitrust subcommittee hearing, where others giving testimony include Lieberman, Free Press Policy Director Matthew F. Wood, Georgetown University Center for Business and Public Policy project director Larry Downes and Keyser.
Keyser plans to tell to committee that the merger, along with that of Comcast and Time Warner Cable, will harm the creative community. “They will use their power to accept below market rates for their product,” Keyser plans to say. “It is a stated goal of the merger to reduce affiliate fees. The problem is: It is those fees that have fueled the recent boom in creative programming — particularly on cable. Reduce those fees through the outsized power of monopoly — and the result is less creativity, less product, less innovation.”