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Will New York regulators stop The Comcast-Time Warner deal?
Critics tend to talk about corporate mergers the way they talk about B-movie monsters. And why not? Sometimes, corporations are like the Blob: constantly growing, swallowing up everything in their path. Some get so big that entire cities are at their mercy. So it goes with the proposed Comcast-Time Warner Cable merger. If approved, the merger would make Comcast, already the largest pay TV and broadband Internet provider in the country, even bigger. And directly and indirectly, the deal would influence what Rochesterians see on their televisions and how they access the Internet, as well as what they pay for both. Whether the changes would be for better or for worse is an open question, though many consumer advocates, good-government groups, and members of the public expect the worst. “In this situation, where we’re dealing with behemoth telecommunication companies, the consumer and the public interest tend to get completely overlooked, and it’s all about what’s most profitable for this gargantuan entity,” says Susan Lerner, executive director of Common Cause New York, which opposes the merger. Under the terms of the deal, Comcast would swallow up Time Warner Cable through a $45.2 billion all-stock deal. Instead of cash, Time Warner Cable stockholders would get shares in the new, bigger Comcast. The proposed merger, which the companies announced in February, still has to clear regulatory reviews at the state and federal levels, as well as a federal antitrust review. If the merger happens, approximately 30 percent of pay TV subscribers in the country would be Comcast customers. Comcast and Time Warner are already the top two providers of broadband Internet in the country. So a bigger Comcast would hold an even larger share of that customer base. Comcast and Time Warner naturally put a positive spin on the potential consolidation. They say the new, bigger Comcast would have resources to improve its network and services and to expand its infrastructure into underserved areas.
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The company would also be in a better position to compete against its national peers, such as Dish, DirecTV, Verizon, and AT&T, Comcast says in factsheets on the merger. But what Comcast and Time Warner Cable like about the merger is also the reason critics and consumer advocates say that the deal shouldn’t happen. The new company would be too big, they say, and the public would pay the price: The new Comcast would have David Renner (right), coordinator for Penfield's community access channel, says too much negotiating power, the Comcast-Time Warner Cable merger could present opportunities for local would be difficult to regulate public access channels. PHOTO BY MARK CHAMBERLIN effectively, and could become a television and digital content John Bergmayer, a senior staff attorney with Public gatekeeper. One of the critics’ biggest concerns is Knowledge, a tech policy advocacy group opposed to Comcast’s support for the idea of Internet fast lanes, which would allow Internet providers to charge online both mergers. When the distributors and cable companies start services for faster access to customers. merging, Bergmayer says, the content companies Critics say the bigger companies could better begin to worry about the providers’ buying afford to pay for that access, while smaller companies and negotiating power. And they start making and startups would be stuck at base-level speeds. The Internet is supposed to be a level playing field, and the consolidation moves, too, he says. For example, Fox recently made an $80 billion offer to Time Warner arrangements could stifle innovation, they argue. Inc. (which is a separate company from Time Warner Opponents of the deal also fear that the merger Cable). Time Warner rejected the bid and Fox would trigger a new wave of telecommunications executives have since halted efforts to woo the studio. and media consolidation. Soon after the Comcast “Because these mergers tend to come in waves and TWC deal was announced, AT&T and DirecTV each one justifies the next one, that’s a very important announced their own merger plans. AT&T would reason why you really have to stop the first one,” purchase the satellite television provider for $48.5 Bergmayer says. “You really can’t just wave mergers million, though the deal also requires federal through, as regulators sometimes want to do.” regulatory and antitrust approvals. Like Comcast, AT&T sees the acquisition as a At the federal level, the Comcast-Time Warner Cable matter of content and delivery. But it also sees the merger requires licensing approvals from the Federal acquisition as a way to compete with cable. Communications Commission and antitrust clearance “It really shows one of the biggest problems with from the Department of Justice. these mergers, which is it creates an arms race,” says