Over the weekend, AT&T announced it plans to buy DirecTV for $48.5 billion. That is, of course, pending approval from federal regulators that are already busy sorting out a different telecommunications merger: Comcast’s bid to buy Time Warner Cable.
“Big fish are swallowing small fish,” says Reed Hundt, former chairman of the Federal Communications Commission, of the changing media landscape. “And if you want to avoid being swallowed, you need to be a bigger and bigger fish.” AT&T, which is primarily a wireless provider, wants to diversify – to be able to sell customers phone service, internet access, and television.
And its advantage in selling regulators on the deal? Its size. "In terms of the pay TV business," says Todd Rethemeier of Hudson Square, "AT&T is a relatively small player."