The Norman Transcript

Columns

February 15, 2014

Merger doesn’t have to be bad

NORMAN — The proposed merger between Comcast and Time Warner Cable, the country’s two largest cable TV operators, generated a predictable wave of outrage from opponents of corporate consolidation. With about 30 percent of all pay-TV customers served by its wires, the combined company would have extraordinary leverage when negotiating with television networks over the fees for their programming. It also would be the gatekeeper to a third of all U.S. homes with broadband.

Those are scary scenarios for consumers and content companies. The underlying problem for them, particularly in broadband, is that today’s markets have too few competitors to protect against service providers that put their thumbs on the competitive scales. But while Comcast’s takeover of Time Warner Cable wouldn’t improve that situation, it wouldn’t necessarily make it worse either.

Unlike AT&T and T-Mobile, whose proposed merger was blocked by the Justice Department, Comcast and Time Warner Cable don’t go head-to-head in any markets. Their lines run in different cities, or in the case of New York and a few other towns, in different neighborhoods.

So the concerns raised by the deal stem mainly from the extra weight Comcast will be able to throw around when negotiating for content, equipment and bandwidth.

Some supporters of the deal say that a larger Comcast-TWC entity would be able to pay TV networks less for their programs, holding down the fees that have driven up consumers’ monthly cable bills.

That may be true, but there’s also the risk that Comcast would use its leverage over TV programmers to gain an unfair advantage over other pay-TV providers, such as DirecTV and Verizon’s FiOS. Or that it would charge them excessive fees for the programming networks it owns, including NBC and regional sports channels.

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