How the AT&T-DirecTV deal plays in Latin America

In the US, satellite TV has been at something of a disadvantage, compared to cable.

“Part of the reason for that is they lacked the clout to effectively negotiate reasonable rates for content, so they’ve always lagged in the content wars,” according to David Balto, a former policy director for the Federal Trade Commission who now runs a private anti-trust practice. The merger will, says Balto, place both AT&T and DirectTV in a much better position to bargain for content in the US, making it “a much stronger rival to Comcast.”

There are places, however, where satellite already has the upper hand and where DirectTV has a significant stake that could accrue to its and AT&T’s mutual benefit, if the merger makes it past regulators. In many emerging markets, where public infrastructure is limited, satellite access is cheaper and more feasible for consumers. DirectTV has aggressively targeted Latin America, where it now has around 18 million subscribers, and which constitutes its fastest growing segment.

“There’s a great opportunity for expansion in Latin America,” says Erik Brannon with IHS Global Insight. “As people become more affluent, uptake of more high-end cell services like what we enjoy domestically would become the norm, so it’s a significant opportunity for AT&T to expand and do what they do best -- provide wireless services.”