Is It Consolidate or Die for TV and Broadband Companies?

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Source: http://www.flickr.com/photos/mrjkbh/

Source: http://www.flickr.com/photos/mrjkbh/

As consolidation turns the Internet and cable television industries into an arms race, two more giant telecom companies are looking to join forces. AT&T (NYSE:T) is in talks to purchase DirecTV (NASDAQ:DTV) for a reported $50 billion, although the deal appears to be several weeks away from being finalized. There are definite advantages for both companies in combining forces, but the news has consumers grimacing at what consequences could come as a result.

The proposed merger is most likely being discussed as a result of the recent news of Comcast (NASDAQ:CMCSA) attempting to merge with Time Warner Cable (NYSE:TWC), which would make the resulting entity the largest and most powerful Internet service provider and cable operator in the country.

The logic behind the merger is simple for DirecTV, as AT&T would help ward off the large number of subscribers who are jumping ship and opting instead to pay for streaming video services like Netflix (NASDAQ:NFLX) or Amazon (NASDAQ:AMZN) Prime in lieu of satellite television. The numbers of “cord cutters” has been growing, which is one of the factors contributing toward the recent round of acquisitions and mergers in the cable and Internet industry.

While DirecTV and AT&T have had a longtime partnership, the actual combination of the two companies would create the second-biggest cable and TV conglomerate if Comcast’s deal with Time Warner Cable is allowed to go through by regulators.

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