The Chief Executive Officer of AT&T Inc. – Mr. Randall Stephenson explained before the Congress that an eventual merger with DirecTV will bring more bargaining power with television programmers. Mr. Stephenson added that such a collaboration can put “downward pressure” on prices.
Some analysts and politicians think there may be too much consolidation in the industry as the Michigan Democrat Representative John Conyers said before the House Judiciary Committees panel of antitrust law. Moreover, a broader consolidation and transformation in the industry is said to result in harming customers interests by influencing two major components – narrowing choice and increasing expenses.
As reported by Bloomberg, Mr. Conyers said: “What’s to stop competitors from using the same argument to justify even further consolidation.” He also added that future mergers “will without question result in fewer firms and may harm consumers by limiting choices and raising prices.”
The company is also considered not very good at keeping its past promises associated with mergers. That is the reason why some critics of AT&Ts deal with DirecTV have been putting their efforts into persuading politicians that they should be sceptical to the eventual acquisition of DirecTV.
The purchase is estimated at 48.5 billion dollars and is only part of the several major takeovers that are awaiting consideration and approval by the regulatory authorities in the U.S. The news of the proposed acquisition followed the bid of Comcast Corp. towards Time Warner Cable Inc. If the transaction between DirecTV and AT&T Inc. is to be finalized, it would bring together a major satellite TV provider with the second-biggest wireless mobile carrier in the country.
The Chairman of the Judiciary Committee Mr. Bob Goodlatte commented in a statement, which was cited by the Financial Times: “Depending on the actions of [regulators], the telecommunications industry may experience significant change over the next year. As the committee and the relevant government agencies examine the potential issues associated with the multiple proposed telecommunications mergers, we should be mindful that assuring the best interests of consumers is the ultimate goal.”
AT&T Inc. was 0.28% down to close at 35.29 dollars per share yesterday, marking a one-year change of +2.41%. According to the information published on CNN Money, the 24 analysts offering 12-month price forecasts for AT&T Inc. have a median target of 35.50, with a high estimate of 42.00 and a low estimate of 25.00. The median estimate represents a +0.60% increase from the last price of 35.29.
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