June 25, 2014 in Business

AT&T chief says DirecTV deal will slow price increases

Associated Press

NEW YORK – AT&T’s CEO told Congress Tuesday that his company’s purchase of DirecTV will help slow increases in programming prices but won’t lead to a decrease in prices.

CEO Randall Stephenson spoke to two congressional committees to defend AT&T’s $48.5 billion deal to buy the country’s largest satellite TV broadcaster.

Sen. Richard Blumenthal, a Connecticut Democrat, pressed Stephenson on the cost issue at a hearing of the Senate Commission of the Judiciary.

Stephenson said pay-TV costs are rising because of programming costs driven by TV studios and sports networks and said he couldn’t promise a price decline.

AT&T has its own pay-TV service, with 5.7 million subscribers. A big part of the reason it wants to link up with DirecTV, which has 20 million subscribers, is to gain access to programming at lower rates, thanks to greater volume.

Public-interest groups say the deal would lead to less competition, since AT&T and DirecTV compete in providing pay-TV services to about 25 percent of the country.

Michael White, CEO of DirecTV, said that should be weighed against the 75 percent of the country where AT&T and DirecTV don’t compete and both can offer stronger “bundles” of wireless and pay-TV services.

Both executives were questioned earlier Tuesday by the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial, and Antitrust Law.

The board of El Segundo, California-based DirecTV agreed to the deal in May, but it needs approval by the Justice Department. The congressional committees have no direct jurisdiction over the merger.

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