Will AT&T Merger Kill Comcast Deal?

“AT&T, sensing that the Comcast/Time Warner Cable merger might be an issue for its attempt to dominate the Internet market, has agreed to shell out $48.5 billion in cash and stock to acquire DirecTV,” The Wire reports. “The merger will make AT&T the second-largest pay TV provider in the country, behind the Comcast/Time Warner behemoth.”

That is, of course, if either merger happens. One scenario in play is that neither merger will get federal approval at all — that, in fact, the AT&T deal will ensure that the Comcast merger with Time Warner (which otherwise might’ve received federal approval) is scuttled. That scenario was offered last week in the Christian Science Monitor, and bears repeating:

What’s still unclear, however, is what the AT&T-DirecTV deal would mean for Comcast-Time Warner’s approval. It presents a complication, those familiar with the talks told WSJ, because regulators would likely have to consider both deals simultaneously, and one would inform the other. “If they approve one they have to approve both,” Kagan says. “It’s hard to know [AT&T’s] thinking on this. It could be a way to get their deal on the same wave of regulatory approval, or it could be a way to derail the Comcast merger.”

Either way, AT&T gets a somewhat level playing field — either by getting huge like Comcast, or by keeping Comcast small.