AT&T CEO makes the worst possible argument for the DirecTV merger

AT&T CEO Stephenson DirecTV Merger

Is AT&T actually trying to convince people to support the DirecTV merger or is this all part of a competition with Comcast and Time Warner Cable to see which major proposed merger will generate the most public hostility? AT&T CEO Randall Stephenson testified before the House Judiciary Committee on Tuesday to make the case that his company’s proposed merger with DirecTV will be good for consumers. And right off the bat, Stephenson made a highly dubious argument that we’d have a hard time believing was real if it hadn’t been relayed to us through AT&T’s own Twitter account.

“Customers are looking for bundles that combine pay TV and broadband,” Stephenson said in his opening remarks.

Yes, you heard that correctly: AT&T thinks that the public is going to love its merger with DirecTV because it will allow the combined companies to offer broadband and pay TV bundles, just like the ones Comcast and TWC offer that are beloved by consumers nowhere. In fact, The Washington Post’s Cecilia Kang tells us Stephenson said consumers “overwhelmingly” want to have bundled TV and broadband services, which really just flies in the face of reality.

The trend nowadays, especially among younger people, is to have a broadband subscription only and rely on mobile streaming services to get your television fix. A survey released last week from Harris Interactive showed that people between the ages of 18 and 36 are actually more likely to watch their favorite shows through online streaming services than through pay TV services, which makes them an anomaly among all age groups.

Why younger people are turning away from pay TV bundles isn’t hard to understand — they’ve become insanely expensive. A study released by the FCC earlier this year found that basic cable prices increased by 6.5% throughout 2012 while expanded basic cable prices rose by 5.1% over the same period. In contrast, the general rate of inflation as measured by the Consumer Price Index throughout 2012 was just 1.6%, meaning that basic cable prices rose at more than four times the rate of inflation in 2012 while expanded basic cable prices rose by more than three times the rate of inflation.

If Stephenson really thinks that people in the United States are crying out for one more pay TV bundle, we get the feeling that he’s in for a rude awakening.

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