The telecom industry is a jungle, and it just got a new 800-pound gorilla.
AT&T and DirecTV agreed to merge in a $48.5 billion deal that will create a nationwide giant in TV, wireless and Internet — a company so big it will rival the controversial combo that Comcast has proposed with Time Warner Cable.
Consumer advocates immediately blasted the AT&T-DirecTV deal, raising worries that a handful of behemoths controlling the nation’s online and TV networks will jack up prices for consumers while skimping on service.
“The industry needs more competition, not more mergers,” said John Bergmayer of Public Knowledge, an industry watchdog group. “The burden is on AT&T and DirecTV to show otherwise.”
Comcast sparked antitrust concerns three months earlier with its $45 billion offer for Time Warner cable. Meanwhile, Softbank, the Japanese firm that owns Sprint, has made no secret about its appetite to acquire T-Mobile USA.
The mergers could likewise send competitors like Verizon, Cablevision and Charter Communications scrambling for dance partners, analysts said.
Ironically, however, insiders said the AT&T-DirecTV deal could end up greasing the wheels in Washington for the Comcast-TWC merger to get approved.
That’s because the two merged entities, whose deals face scrutiny from the Justice Department and the Federal Communications Commission, can argue they’ll be locked in brutal competition as they square off against each other to compete for pay-TV, wireless and online customers nationwide.
Both combos will be scrambling for dominance over content providers as they look to seize share in the fast-growing video-streaming business. Last month, AT&T entered a joint venture with the Chernin Group to invest in online video.
Some analysts question how much ground AT&T will gain online with the deal.
Still, the move will allow AT&T to add DirecTV’s 20 million satellite-TV subscribers to the 5.7 million AT&T currently has for its U-Verse TV service, which currently spans 22 states.
The combined subscription base of 26 million customers would be second only to Comcast and TWC’s, which boasts 30 million combined.
While satellite and cable TV are losing ground to Internet streaming, they’ll remain a cash cow for years to come, analysts say.
AT&T on Sunday agreed to pay $95 a share for DirecTV, about 10 percent above DirecTV’s closing stock price on Friday and about 30 percent higher than where the shares traded before word of the merger.
It’s the biggest deal for AT&T since it tried to buy T-Mobile three years ago for $39 billion — a merger that got scuppered on antitrust concerns.