AT&T-DirecTV Deal Is All About Spectrum: Bibb

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June 24 (Bloomberg) -- Brean Capital Senior Analyst Todd Mitchell and Mediatech Capital Partners Porter Bibb discuss AT&T and DirecTV seek approval from Congress. They speak with Trish Regan and Alex Sherman on “Street Smart.” (Source: Bloomberg)

On the stock.

You like this idea, don't you?

Yes, i do.

I think it will make at&t a better and more competitive company.

More competitive company how?

At&t has been weak on video.

Directv has a premier video product.

I think there is some truth to bringing down the prices of consumers.

This will give at&t a better bundle to compete against the comcast-time warner merger.

Does this ultimately mean lower prices for consumers?

I agree wholeheartedly with that it is a good deal for the investors.

For the company, ok.

What this congressional hearing is today is a roadshow for at&t and for direct.

They are doing a fabulous job selling the benefits, not necessarily to congress which has no bearing on the issue, because they will not be able to regulate or stop this deal, which will go through.

It is for investors.

Look at at&t. it is undervalued right now.

It has a 10 pe and when you put this deal together, all of the so-called benefits that have been outlined for congress that todd touched on, whether they happen or not, it will be years before anybody can really count the change.

And the valuation is much higher than it would have been.

Rightful stop it is a great deal for investors.

-- right.

It is a great deal for investors.

Alex, would you come out on this as far as what might be accomplished right away echo what do we have to lose and what do we have to win?

I think we need to ask the question of what it means to lower prices.

Right now, i buy my wireless services from at&t and my pay-tv services from directv.

If i put them together in one company, am i going to pay less?

Immediately, the answer to that is probably yes.

In that sense, it probably lowers prices.

Does it mean that five years from now you will pay less from your -- for your pay-tv service than you do today?

I would say the answer to that is almost assuredly no.

The idea of at&t and directv coming together will somehow push back on the entire ecosystem of content companies, meaning disney and foxx and cbs, pushing up their prices, that is wishful thinking.

It does give the company more scale and makes them a bit eager.

He does not give them so much scale that they can tell disney, we will not take your price hike.

They will still need espn.

They will still need to pay into comcast.

Todd, go ahead.

One of the things people are missing is the value of the bundle.

It's not just that the lower is bundle -- that the bundle is lower when you buy from one provider, but that there is less churn.

What really builds these business models is churn.

If at&t can bring is turned down, -- it's churn down, it can maintain the bundle and perhaps moderate an increase in prices vis-a®-vis the other big providers.

Another big cell is something that john mccain has campaigned against -- not on the literal sense, but has been urging legislation against it.

To contain it.

And they've been looking at the whole concept of tunneling, too.

Yes, a lot of stuff you don't necessarily need and you do not want to pay for.

The big deal is broadband.

At&t does not have excess broadband.

They would like to take their wireless service and give it to the 38 million directv subscribers, but they cannot.

They do not have any spectrum.

And directv has virtually no spectrum at all.

They have outsourced their broadband.

They would have made more sense to put at&t and dish together, but that is one that would never happen because of the spectrum.

How does it change the media industry going forward?

What might we say -- see from other players?

The big question is whether verizon and dish will get together.

That would be the exact reaction to at&t and directv.

But you will run into the spectrum problems again if those two companies came together.

Instead maybe what we should look to is some of the content companies potentially getting together as a reaction to all of these distributors coming together.

In other words, could we see viacom and cbs come together again?

Wouldn't that be interesting?

Or at least more consolidation among those companies.

Is that what you see happening?

The content companies will have to consolidate as the distributors are.

They would need that ability to keep from being strong-armed by pricing.

What is google going to do?

What is amazon going to do?

Both of them have designs on the market for wireless distribution.

There are other factors here and those are big companies with big balance sheets.

I think we need to look at it through a new rubric.

Just two tots point, there is nothing that prevents google or amazon -- adjust to todd point,

This text has been automatically generated. It may not be 100% accurate.


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