The Winners & Losers of a Time Warner-Comcast Mega-Merger

Wednesday, April 09, 2014

Columbus Circle in New York City, home to the world headquarters of Time Warner. (Emin Kuliyev/Shutterstock)

Television giants Comcast and Time Warner Cable are getting a bit less creative when it comes to the options its customers may soon have.

Today, Comcast, the nation's largest video, high-speed Internet and phone provider, will go before the Senate Judiciary Committee to defend its desire to purchase the second largest-cable company in America—Time Warner Cable—for $45 billion.

“I think the transaction is a lot less scary, it's a lot less large, and a lot less complicated than some people would like to make it," Comcast EVP David Cohen said during an interview on C-SPAN last month. "This is not a horizontal deal. We don't compete with Time Warner Cable anywhere. There isn't a consumer in America who has a choice between buying Comcast products or TWC products and, at the end of the day, we are going to have under 30 percent of the market so it's not particularly scary."

But some critics of the mega-merger say the implications for consumers—and for innovation—may not be as seamless as Cohen suggests.

One of the most vocal voices banging that drum has been David Carr, media and culture columnist for our partner The New York Times. He wonders how the largest cable company in the country can bid to buy the second-largest and gain control over 19 of the country’s top 20 markets—corralling a 30 percent market share in cable and a 40 percent share in broadband.

"It's very big business, and we're talking about something that is really deeply embedded in consumers' lives," says Carr. "It isn't really about cable, it's about the internet—the internet is sort of like your water faucet or electrical outlet: You expect to turn it on and have it work."

There are two sides to this issue. On the one hand, Carr says that consumer advocates argue that this merger will further centralize an already limited array of choices when it comes to internet providers. Comcast, however, argues that there are other options consumers can choose from, like Direct TV or Dish Network.

"But they can't provide you a hardwired connection to the internet, which is what most American consumers and businesses care about," says Carr. "I think Mr. Cohen would argue that this is a time of fast-evolving business models on the internet and that a company like his needs scale to compete."

Carr adds that Comcast argues that the merger will help them to grow and support their infrastructure in order to compete with companies like Apple, Amazon and Netflix. 

"In the instance of Comcast, you have somebody that controls the pipes and to some degree what goes in them," says Carr. "Don't forget that they own NBC Universal. They not only come to your house with the cable, but they're the ones that give you the TV show 'Community,' for better or worse, and even theme parks."

Outside players are frightened by Comcast, according to Carr.

"What Apple and Netflix would argue, and they would do it quietly because they're really afraid of angering Comcast, is that [Comcast is] controlling the intersect with consumer," he says. "They're the ones who are going to have the skin on your television that's going to decide whether you can watch Netflix in a reliable way, or whether you can get Apple's devices authenticated on your television. They worry that [Comcast is] going to have market power to kind of squeeze off and determine who can come across the bridge."

Carr argues that in addition to reducing choice, this mega-merger will drive up costs for consumers. However, Cohen says that Comcast consumers pay 92 percent less per megabit than they did a decade ago.

"Prices are not going down and Mr. Cohen has said that himself," says Carr. "If this deal is going to result in such savings and such economies of scale, how about showing the consumer a little sugar? How about we get to dip our beak in too? It puts a lot of market power in the hands of a single provider and the alternatives are, in many instances, far inferior."

Listen to the full interview for more analysis from Carr.

Guests:

David Carr

Produced by:

Ellen Frankman and Jillian Weinberger

Editors:

T.J. Raphael

Comments [7]

Russell from Seattle - Capitol Hill

"Comcast consumers pay 92 percent less per megabit than they did a decade ago"

This made me laugh because we have the worst service here in Seattle. No one can do anything reliably at during prime time hours. I recently received a letter from Comcast telling me that they would be doubling my plan from 24 mbps to 48 mbps at no extra cost. Seems clear now that they are hiding behind untested and irrelevant bandwidth numbers to try and convince people they are not getting screwed over.

I have to use my phones LTE to play on Xbox live via tethering. I know when I'm being bent over Comcast. Thanks for the extra bandwidth. You always know the right way to rub salt on a wound.

Apr. 10 2014 03:35 PM
Jane

Seriously? we have to go over the history and argument of monopolies again? I don't believe the percentages given in this discussion, the current unemployed and income gap leaves a much higher percentage of the population unable to afford the ridiculous cost of internet pricing to the consumer, and a vast majority do not have more than one option for services as stated - I also recently heard on a public broadcast program that in Europe they pay approximately $10 a month for the internet...people are willing to pay a reasonable rate, the "bit guys" can make still get rich but please quit RAPING the majority...

Apr. 09 2014 12:50 PM
North of Philly

Comcast, is the evil empire! Followed close behind by Disney in a race to see who can control the masses. The government broke up Bell Telephone when will they step in on this merger with Time Warner?

Apr. 09 2014 12:06 PM

I don't have a good feeling about Comcast becoming even bigger. They absolutely should not be in charge of "the bridge" to the internet. If anybody else uses Comcast.net and their web mail interface, you will be familiar with their awful page login process in which you have to go thfu no less than three pages to get to your inbox. Ridiculous to think these same people would hold the keys to the kingdom.

Apr. 09 2014 11:55 AM
Larry Fisher from Brooklyn, N.Y.

David Carr is banging the drum today, and might be sending his e-mails via smoke signals tomorrow once Comcast buys out Time Warner Cable and cuts him out of the loop ( that is the fear of too powerful a cable company).

Apr. 09 2014 11:43 AM
Mihai from Yonkers

It is correct "...to defend its desire..." not "...to defend it's desire..."

Apr. 09 2014 10:33 AM
ML from Miami FL

I was going to write something here about how this is a bad idea. But for every point I put down I could think of a plausible counter-point. Null. The only winning argument is not to argue this at all.

Personal story: When I dropped cable (high prices, bad service) there was no other company. No more cable TV. But I have an antenna so it's okay. If the same conditions arise with my Internet provider there will be no antenna to fall back on. How would I be able to defend our capitalism then?

Apr. 09 2014 09:53 AM

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