No way Comcast will buy Time Warner Cable

Regulators will look closely at giving one company such dominance in pay TV, but they'll balk at giving Comcast the keys to our Internet.

By The Week Feb 13, 2014 12:04PM

File photo of the Comcast logo on a television screen (© Elise Amendola/AP Photo)By Peter Weber, The Week


Comcast (CMCSA) is proposing to buy rival Time Warner Cable (TWC) for $45 billion, combining the No. 1 and No. 2 cable TV providers in the country.


The all-stock deal needs approval from each company's board of directors -- reportedly a done deal -- as well as the Justice Department's antitrust division and the Federal Communications Commission.


The deal isn't going to happen. Not in any recognizable form. 


First, here's the argument for why it might: Comcast has 22 million pay-TV subscribers and TWC has 11 million, a number it has already suggested it could shave by three million under the deal. That would give the combined Comcast-TWC about 30 million subscribers -- far more than its closest cable rivals (as of 2012, Cox Communications had 4.5 million subscribers, Charter Communication had 4.2 million).


But 30 million customers would still be about 30 percent of the national market for pay television -- the FCC's unofficial cut-off point for blocking a deal.


That pay-TV number includes satellite-TV providers like Dish and fiber optic providers like Verizon's (VZ) FiOS, so Comcast's share of the cable TV market would be higher than 30 percent. But still, "a merger may have little impact on consumers," says David Gelles at The New York Times. "Comcast and Time Warner Cable compete in very few markets. As a result, few consumers will see their choices of cable operators reduced."


In other words, your choice for cable TV, wherever you live in America, would be a very aggressive Comcast or smaller, maybe local, providers with comparatively tiny marketing budgets and little muscle.


"Let's get to the bottom line," says Michael Hiltzik at The Los Angeles Times. "There's no way this combination can conceivably be in the public interest." The only real question on the table is "whether the FCC will fold against the economic and political power of these two behemoths."


Well, economic and political power, meet "optics." The proposed merger may not give Comcast a full stranglehold on cable TV access, but it looks like it will. Everybody who has even considered getting cable TV or broadband internet knows that Comcast and Time Warner are the two giants in the room. That's a lot of Americans. Will they care if the giants get hitched? Craig Aaron, president of the consumer advocacy group Free Press, makes a compelling argument they will:


No one woke up this morning wishing their cable company was bigger or had more control over what they could watch or download. But that -- along with higher bills -- is the reality they'll face tomorrow unless the Department of Justice and the FCC do their jobs and block this merger. Stopping this kind of deal is exactly why we have antitrust laws. Americans already hate dealing with the cable guy -- and both these giant companies regularly rank among the worst of the worst in consumer surveys. But this deal would be the cable guy on steroids — pumped up, unstoppable and grasping for your wallet. [Free Press]


If there were a Hall of Fame for persuasive press releases, that would have to be a serious contender.


But let's say public outrage fails: There's also the issue of broadband Internet and VoIP (internet) telephone service. Unlike with pay-TV, here Comcast would be the indisputable king. If this merger goes through, notes Om Malik at GigaOm, "Comcast will become the largest broadband provider in the United States, and perhaps the largest outside China." It would have 33 million broadband customers and "control about half of what is called triple-play services -- video, voice, and Internet -- in the U.S."


Along with the pay-TV muscle, this would give Comcast-TWC enormous power in negotiations with content providers, especially since Comcast already owns one of the big ones, NBCUniversal. Allowing one company the keys to one of the most important (and most lucrative) utilities that come into our homes -- the Internet -- could also raise prices and restrict the amount of the web you consume (read: Netflix). Comcast caps the amount of data customers can use each month, for example, while TWC does not.


The FCC isn't the only agency that can scuttle this deal -- the Justice Department's antitrust chief has been pretty aggressive in challenging mergers, at least wringing concessions in cases where the deals went through — but the wild card in this whole Comcast deal is new FCC chairman Tom Wheeler. Wheeler used to be a top lobbyist for the cable industry, but he promises to be a tough advocate for consumers now.


On Monday, at a high-tech conference in Boulder, Wheeler talked up "the primacy of 'competition, competition, competition'" in protecting the rights of consumer. "Our competition policy will take the 'see-saw' approach," he added. "When competition is high, regulation can be low; when competition is low, we are willing to act in the public interest."


Well, "the Comcast-Time Warner deal manifestly would be disastrous for the competitive landscape Wheeler says is his paramount goal," says The Los Angeles Times' Hilzik.


I don't know if Comcast really thinks this deal will sail through, or if it's just trying to scuttle the efforts by Charter to buy Time Warner. But someone in the Obama administration will surely stop this train. My money's on Wheeler.


More from The Week

 

3Comments
Feb 13, 2014 7:51PM
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former lobbyist now FCC chair man...its a done deal
Feb 13, 2014 1:47PM
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I saw 2 young guys sleeping soundly in a Time Warner truck parked in a quiet side street and they can get away with it. Comcast techs are under the gun for appts. and I think they are better than Time Warner Cable whose bad management will drive the customers to verizons fios.
Feb 13, 2014 12:27PM
avatar
Even if they merge, there is still more than enough competition. The deal should be approved but I don't think it will. 
So tell me, how would Time Warner going bankrupt serve the people?
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