AT&T faces regulatory gauntlet to buy DirecTV

It's beyond the rumor stage: AT&T (T) plans to buy DirecTV (DTV) for $48.5 billion in stock and cash.

AT&T wants to bulk up, a trend in the telecommunications business. Look at Comcast (CMCSA), which wants to buy Time Warner Cable (TWC) in a $45 billion deal, and Sprint, which wants to merge with T-Mobile USA. They all are trying to address slowing or even negative growth in customers.

But will regulators allow them to do so? Concentration in communications, media, and Internet service has raised concerns that bigger does not necessarily mean better.

Look at AT&T's previous proposal to take over T-Mobile. The argument then was that the company had to get bigger to be competitive. But regulators didn't buy it and nixed the deal. Too big, too dangerous to the market.

The historic trigger for anti-trust concern has been when one company approaches two-thirds market share. Even then, it was at best a rule of thumb. Microsoft has exceeded that for years in the desktop operating system and Google comes close to two-thirds of online searches. But there is a difference between consumers throwing their lot in with a favorite and companies combining forces to create ever larger behemoths, and skepticism over megadeals, at least in tech and communications, has continued.

U.S. regulators might not OK a deal between Sprint and T-Mobile USA. The previous AT&T and T-Mobile deal was blocked, in part because regulators thought that having four major providers rather than three was good. However, if AT&T had bought T-Mobile, the result would have been two huge firms -- AT&T and Verizon (VZ) -- and a much smaller Sprint.

And all four firms were in exactly the same business. AT&T knows that DirecTV is only in satellite-delivered pay television and long ago divested the satellite Internet broadband business. Complementary companies might raise less regulatory concern. After all, Comcast was allowed to acquire NBCUniversal. However, AT&T does have television subscribers and the combination of the two would be second only to the proposed Comcast and Time Warner merger.

AT&T has already said that it would divest of Mexican mobile phone network operator América Móvil, but that might hold no weight with regulators. América Móvil is a wireless phone carrier, not a television provider, and doesn't operate in the U.S.

If AT&T wants a clear path, it might have to give up something far more relevant, like selling some block of television subscribers to a competitor, which would seem to defeat the purpose of the acquisition.