Netflix urges revisions to AT&T-DirecTV deal

Netflix urges revisions to AT&T-DirecTV deal
The AT&T logo at Whitacre Tower, the AT&T global headquarters building at One AT&T Plaza in Dallas. (Larry W. Smith / EPA)

Netflix is urging the Federal Communication Commission to reject AT&T's $48.5-billion purchase of satellite TV company DirecTV unless revisions are made.

The video streaming giant, in a letter dated Monday, said the deal in its current form could potentially hurt online video distributors such as Netflix and Hulu.

Representatives from Netflix also met with FCC officials last week to raise its concerns of what the combined power of the companies could yield.

AT&T is the second-largest U.S. wireless carrier, while DirecTV is the second-largest pay-TV provider. Should the acquisition go through, it would make it the country's largest pay-TV provider with extensive broadband reach.

"AT&T's investment in a business model that profits by selling bundled programming packages will result in a powerful incentive to protect that model," Netflix wrote in its letter.

It could result in an attempt to slow down cord-cutting, according to Netflix, by implementing data caps or usage-based pricing that would put Netflix at a disadvantage.

That's not to say Netflix, which has been active in the government's review of the deal, is opposed to the acquisition in principle.

"While we are participating in the government's review, we are not opposing the merger," Netflix spokeswoman Anne Marie Squeo said in a statement on Tuesday. "We've been highlighting concerns about AT&T's broadband practices and the need for appropriate remedies since last September."

This isn't the first time Netflix has raised concerns about a mega-acquisition. The company spoke out against Comcast's proposed $45-billion purchase of Time Warner Cable, which would have combined the two largest cable companies in the U.S. Comcast ultimately called off the deal. 

AT&T declined to comment on Netflix's letter. The company agreed to purchase the El Segundo-based satellite giant last spring for $48.5 billion. The companies expect the deal to close by the end of June.

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