The S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES:^DJI) were up 0.11% and down 0.09%, respectively, at 10:30 a.m. EDT. One might have expected investors' spirits to be rather buoyant on "merger Monday," following the announcement yesterday that Dow component AT&T (NYSE:T) would acquire pay-TV provider DIRECTV (NYSE:DTV) in a deal valued at $48.5 billion.

The acquisition, if approved, would constitute a landmark in the restructuring of the telecommunications and pay television sectors. The dominos are falling in a race toward consolidation between the two sectors: By AT&T CEO Randall Stephenson's own admission, this deal was prompted by Comcast's (NASDAQ:CMCS.A) $45 billion agreement to purchase Time Warner Cable, which stands to create a cable powerhouse with nearly 30 million subscribers (the AT&T- DIRECTV tie-up would boast 26 million subscribers).

Source: Wikipedia.

This latest deal also recognizes the growing importance of mobile devices, which have accelerated the desire for "on-demand" viewing. As DIRECTV CEO Mike White told Bloomberg yesterday: "Over the last year, things began to change with technologies -- AT&T started to be able to offer more broadband and better broadband. With it comes a continuing evolution for mobile video. It's about TV everywhere and watching TV on all devices."

However, the market this morning doesn't appear to be convinced by grand visions for the industry or strategic rationales of cost saving forecasts, with shares of AT&T down 2% at 10:30 a.m. EDT. Even more striking: Based on Friday's closing price of AT&T's shares, the cash-and-stock offer values DIRECTV at $95 per share. Despite this morning's decline in AT&T's shares, that value is firm (the number of shares DIRECTV will receive is contingent on AT&T's share price), yet DIRECTV shares are trading below $85, which represents a sizable discount.

That discount suggests investors have significant concerns that the deal will fail, despite the fact that it has been backed unanimously by the boards of both companies. The only obvious obstacle that I can see is regulatory approval, but The Wall Street Journal reported that regulators view the combination of AT&T and DIRECTV as a potential bulwark against a dominant position by Comcast and Time Warner Cable. The market appears to be signaling approval isn't a "gimme," but I don't see one deal proceeding without the other. At a 10%-plus spread, the deal could make at least one constituency of investors happy: merger arbitrageurs.