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As Comcast today announced plans to gobble up Time Warner Cable for $45.2 billion, one of its favorite talking points was that the deal won’t hurt competition because the companies’ geographic markets don’t overlap.
OK, but that’s indicative of the big problem. The cable/Internet market already is plagued by consolidation and dominated by a few giant conglomerates–who don’t compete against one another.
So we could be on the verge of making a bad situation worse. The deal would create the largest cable company in the U.S., with around 30 million subscribers, representing just under 30 percent of the U.S. pay television video market, according to Reuters.
The companies seem confident the merger will be complete by the end of the year, provided the U.S. Department of Justice and the Federal Communications Commission (FCC) bestow their blessing. But there’s a long list of questions to answer to satisfy the FCC standard that this deal is in the public interest. Among them:
-Will greater consolidation further erode service quality and increase prices?
-Will Comcast, only a few years removed from the NBC Universal takeover, leverage its new market power to restrict programming content?
-Will Comcast crush “net neutrality,” which might already be on the ropes after a recent federal court decision?
This last one is a biggie. A free and open Internet seems as American as apple pie, and providers like Comcast should NOT be allowed to force website creators to pay higher fees to prevent their content from getting blocked or burdened by slow speeds. Right now, we have a superhighway of information, and the fear is that this deal could perfectly position Comcast to set up a toll booth.
Any wonder why a bigger cable company isn’t exactly on anyone’s wish list? Yet, Comcast seems confident it can deal with any hoops or hurdles the FCC throws down. “We wouldn’t be doing this if we didn’t think we could get it approved,” Comcast CEO Brian Roberts told CNBC this morning.
Whether or not Mr. Roberts is correct, only time (Warner) will tell.
