The top executives of
In appearances before the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law and the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, AT&T Chief Executive
Announced last month, the AT&T-DirecTV deal came just three months after cable television giant
AT&T and DirecTV say they need to combine to be able to offer consumers both broadband and video the way cable companies do. By getting bigger, AT&T will also have more leverage in negotiating distribution agreements with programmers. AT&T currently has 5.7 million video subscribers, while DirecTV has more than 20 million.
"We'll be able to offer new services to customers at a better value," White said at the Senate panel hearing.
AT&T's Stephenson said that by acquiring DirecTV, "AT&T will be a more effective competitor to cable." Stephenson also said buying DirecTV will allow AT&T to speed up rolling out high speed broadband to rural America.
"Being able to offer DirecTV's video product on a nationwide basis gives us the confidence to expand and enhance our high-speed broadband service to at least 15 million customer locations across 48 states, mostly in under-served rural areas, within four years after deal close," Stephenson testified.
Stephenson emphasized the savings that the two companies would realize by teaming up. He said cost savings would be $1.6 billion annually by year three after closing and that the bulk of those savings would come from programming expenses.
But some lawmakers were skeptical that consumers would end up enjoying any of those savings.
"If I'm an ordinary customer, I'm rolling my eyes," said Sen.
Blumenthal pressed Stephenson on whether he could commit to passing on savings to the consumer. Stephenson said no and that "at the best we will see a rate of reduction of risking costs." Blumenthal replied: "A lot of consumers would find that answer unsatisfying."
Chris Keyser, president of the
Keyser noted that much of the entertainment industry is already consolidated and that the trend is bad for the creative community.
"The market power possessed by these media conglomerates allows them to capture a majority of the economic value created by television production to the detriment of actual content creators," Keyser said.
AT&T and Comcast's deals have led Wall Street analysts to speculate that major programmers such as