By JH staff, Special for USDR
Some serious legal and public relations obstacles will have to be overcome before the $45.2 billion proposal from media giant Comcast to acquire Time Warner Cable will be able to materialize.
Our frequently misunderstood current antitrust laws are essentially an aggregate of statutes, which, in order to preserve and encourage fair competition for the benefit of consumers, were designed to oversee the organizational structure of U.S. corporations.
The statutes that date back to the 19th Century seek to place limitations on the mergers and acquisitions of business entities and to put in place restrictions on various elements that could potentially lessen competition within the business arena.
Over the course of time legal and economic scholars, particularly those associated with the Chicago school of economics, have had an influence on decisions of the United States Supreme Court, moving the High Court to focus on what is beneficial to the consumer.
Comcast recently made a move to quell antitrust concerns. The company announced that, if the merger should go through, it will drop approximately 3 million subscribers before taking aboard 8 million or so subscribers when the consolidation is complete.
The final outcome of the proposed merger would nonetheless deliver to the public a cable and Internet company that has about 30 million customers, which represents 30% of the nation’s cable TV subscribers.
Another way of thinking about the matter is that the resulting company would service 19 of the country’s 20 largest metropolitan media markets.
Many people are now paying more for their cable and Internet services than they are for their utility bills. A lot of folks who have little or no choice in their selection of a cable provider are highly frustrated, as evidenced by social media sites that are replete with stories of poor cable service and consumers’ desires to “pull the plug” altogether.
In this writer’s opinion, the proposed merger of the country’s #1 and #2 cable television providers is unprecedented in its scope, and, quite frankly, staggering in its significance.
Should the cable worst happen, the unfortunate consequences that are likely to flow from the resulting conglomerate’s newfound media power are higher prices, lower quality of service, fewer channel choices, and throngs of desperately unhappy customers.
Since the new company would be the largest broadband provider in the United States, consumers may also find themselves in the position of being limited in the amount of data per month that would be available to them.
In an attendant part of the would-be transaction, for $17 billion in 2011 Comcast acquired NBCUniversal, which was a major Hollywood media conglomerate in its own right. Should this currently proposed merger occur, the resulting cable hulk would also be the proud owner of Universal Studios, the NBC broadcast network, and the cable news channel MSNBC, among other news, entertainment, and media outlets.
Other entertainment content providers that compete with Comcast have cause for concern as well. New online content generators, including Netflix and Amazon, have already asserted claims that cable companies have contracted with networks to restrict the access of entertainment content to online distribution. Companies offering new cable alternatives delivered via broadband are in the process of striking deals with Hollywood entertainment companies. The new Comcast-Time Warner combo would be gargantuan enough to be able dictate terms to entertainment content providers, causing Hollywood executives a great deal of angst.
In another piece of the media puzzle, the newly merged firm would have heightened clout with broadcast and cable television networks, particularly when it comes to the bargaining table. During the summer negotiations that took place in 2013, Time Warner Cable threw CBS off of its lineup, and DirecTV gave the Weather Channel an indefinite boot, too.
By all rights, the Department of Justice (DOJ) or the Federal Trade Commission (FTC) should step in to prevent Comcast and Time Warner Cable from merging. Typically, the FTC handles mergers involving cable providers, and the DOJ usually approves media companies’ mergers. The sheer expansiveness of the presently discussed deal and sizable NBCUniversal component necessitate the DOJ’s involvement.
However, even if the merger were to be approved by the DOJ, Comcast and Time Warner would, in a separate review, also have to get by the Federal Communications Commission that would theoretically look into whether the combination is truly in the public’s interest.
At this point it is truly a case of anything can happen, so now more than ever the public needs to stay tuned.