The telecommunications giant AT&T decided to join with discoverya content company, to also generate a video-on-demand giant, which was approved in August by the Federal Institute of Telecommunications (IFT), and is currently considering options to achieve the combination of assets on the platform HBO Max.
But the union of these companies has set off alerts by warning of competition risks in the content market, due to the fact that Warner Media, part of Discovery, has a substantial participation in the provision and licensing of children’s programs for pay TV, open Y streaming, whereby the IFT develops an investigation in this regardaccording to a source close to the process.
Something similar could trigger the latest merger intention, but not the latest in the telecommunications industry. izzy seeks to acquire its main competitor in the pay television segment, megacableseeing a potential to create a company better positioned to compete in this sector.
The merger of both companies would result in a Pay TV market concentration of 84%whose sector is already led by Televisa.
The company chaired by Enrique Yamuni, which until now has rejected Televisa’s offer, closed 2021 with a 22.5% pay-TV market share, eight points higher compared to a previous year when it had 14.5%. Televisa, in contrast, reported a 61.5% stake at the end of 2021, which implied a loss of seven points compared to 2020, when the company had 68.5%, according to IFT data.
Specialists agree that in the merger processes of companies, both the IFT and Cofece must analyze in depth the effects that may derive from the pooling of assets in certain marketsAs the streamingwhich is still little explored and not regulated by the competition authorities.
Víctor Manuel Frías, a partner at the firm Greenberg Traurig and an expert in economic competition issues, assures that the issue of mergers and acquisitions is being a challenge for regulators at an international level due to the fact that they are faced with new business models that derive from of technologies and services.
Although the IFT and Cofece face this challenge, there is also a lack of personnel to investigate this type of movement in detail, together with the lack of coordination between both entities of competition to work together to approve pooling of assets that has only led to delays.
“In Mexico we already have a reputation of being a slow country for these procedures. The challenge that the authorities have is to achieve a balance so that companies can make greater investments that result in a better service to the consumer and, at the same time, prevent economic agents from growing so much that they can exercise a dominant position in the market. Frias points out.
In the case of the intention to merge Izzi with Megacable, in addition to affecting competition in the pay-TV industry, it will also generate distortions in the infrastructure by positioning itself as a network-dominant companyespecially fiber optics, the main input for viewing video-on-demand platforms, warns Jorge Moreno Loza, telecommunications lawyer and head of the Expanzione office.
“The issue of developing new business models is going to generate competition problems, especially for high-calibre companies that have resources to invest and that are looking for markets in which there is no effective competition or where there is no one who can stop them,” the specialist points out.
At the moment, there has not been a review on how mergers can bring opportunities to close the digital divide. “Unfortunately, all these concentrations or these new ways of merging are for services in the same towns or regions,” concludes the Expanzione specialist.