AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV) said that the only way for the companies to compete against cable giants like Comcast and Time Warner Cable is for the two companies to merge, according to public interest statement they filed with the Federal Communications Commission today.
AT&T and DirecTV currently have a $48.5 billion proposed merger, which was announced last month. That deal is facing criticism from consumer advocates though. Consumer advocates believe that the merger in the communications market will harm consumers by reducing competition. This could result in higher prices and lower choices.
AT&T and DirecTV argued that the only way consumers will have any competition in the market is if the two companies join forces to take on the cable giants. AT&T said that a merger with DirecTV could lead to lower prices for consumers.
AT&T said that if it can get better rates on video content, it can pass savings onto consumers, who would end up paying less for a bundle of services that includes TV, home phone service, broadband, and wireless services. The competition would also put pressure on cable companies to reduce their prices.
The public interest statement that was filed with the FCC is required as part of the regulatory review process. The FCC is tasked with determining whether the merger is in the public interest. The two companies have to win approval from the Department of Justice, which will examine antitrust concerns.
You can read the AT&T Executive Summary and Public Interest Statement here.