Comcast ‘Goliath’ Seen Buoyed by AT&T-DirecTV in Review

AT&T’s deal for satellite-TV provider DirecTV is a boon for Comcast as the biggest US cable company tries to win antitrust approval to take over Time Warner Cable.

By acquiring DirecTV, AT&T will get the scale to compete more effectively against a combined Comcast-Time Warner Cable, making that transaction appear less threatening to regulators, said Herbert Hovenkamp, a law professor at the University of Iowa. “This merger will improve Comcast’s chances,” Hovenkamp said. “What you want to do in a merger case is show that there are other competitors out there and as a result any opportunity to behave anticompetitively is going to be disciplined by this other competitor.” With DirecTV, AT&T will be able to combine services it can sell to customers, including mobile phone, Internet and television, Hovenkamp said. The antitrust review of the two deals will look at the “cluster market” for the bundle of services the companies sell, he said. “The players who are going to come out ahead are the ones that can make these technologies piggy-back on each other or blend in together, and that’s what AT&T is attempting to do,” Hovenkamp said.

The question for antitrust regulators reviewing the Comcast-Time Warner Cable deal is how much competition from other providers really matters, said Amanda Wait, an antitrust lawyer at Hunton & Williams LLP in Washington. With AT&T combining with DirecTV, Comcast gains a stronger argument that the competition is real, she said. “Instead of being David versus Goliath, it’s more like Goliath versus Goliath,” Wait said about the two companies. “Comcast will say we’re not going to be able to raise prices. We have to compete with AT&T and AT&T is going to be huge.”