AT&T and DirecTV Deal - Case Study Example

The deal will give AT&T an opportunity to reorganize the video entertainment industry. It will have the capacity to offer new data bundles and provide content to customers using different screens such as laptops, mobile devices, and TVs. The company’s preference for DirecTV is because of its premier brand in television subscription, content relationships, and its fast growth rate. DirecTV has more than 20 million subscribers compared to the 5 million subscribers of AT&T’s U-verse television service.

The satellite provider owns the NFL Sunday Ticket package for out of market football games that will also add value to AT&T. AT&T is eager in experimenting with new methods of video distribution. It will satisfy the customers who want to enjoy television on big screens, have the TV on their smartphones on a Netflix style, or any other way possible. The approval of the deal will provide AT&T with growth opportunities due to the increased television revenues. Upon the deal’s approval by the regulators, it will be part of the continued wave consolidation in the telecommunication and television industries.

Comcast, the country’s largest cable provider, also awaits regulatory approval to merge with TWC. The parent wireless company provider Sprint Softbank is in efforts to acquire T-Mobile. Paul Gallant, a Guggenheim Partners analyst describes the situation as an arms race. The acquisition will create a content distribution leader in video, mobile, and broadband platforms. The companies would have to face competitive disadvantages and to merge them as a single entity will increase their competitiveness.

To demonstrate the acquisition advantage, DirecTV satellites cannot provide the high internet speed connections that many customers prefer, of which AT&T can. In an attempt to lure the Washington regulators to approve the deal, their Sunday presentation asserts that the hybrid company will provide internet connections to areas that lack. The statement will increase the chances of its approval as the Obama administration gives priority to internet provision and connection. The presentation predicts that the acquisition will not bother the regulators because the companies cannot move forward without each other.

Some groups are trying to block the approval of the deal. Free Press, a public interest group, opposed the Comcast-TWC merger and is now opposing the joining of DirecTV and AT&T. The chief executive of Free Press argues that the merging wave will eliminate competition in the communication industry that is currently dominated by a few players. Other critics of the Cable Industry Consolidation are of the view that they are no hopes of lower television charges resulting from the deals.