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by Paula Bernstein
February 14, 2014 11:17 AM
1 Comment
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Attention, Film Fans: Here's Why You Should Worry About the Comcast-Time Warner Deal

Claire Danes looking worried on "Homeland" Showtime

When the news broke earlier this week that Comcast, the country's No. 1 cable provider, is going to buy Time Warner Cable, the No. 2 cable provider, in a $45 billion all-stock deal, Twitter was aflutter with gripes that cable service couldn't get much worse.

"Comcast and Time Warner are merging. Finally, you don't have to choose between terrible customer service and awful internet speeds!" tweeted CC:Indecision.

But joking aside, there's a real reason to be concerned about the deal, which is expected to close by the end of the year, pending shareholder and regulatory approvals.

Many creators and programmers are understandably concerned that the newly formed cable behemoth will monopolize the industry, driving up prices for consumers and limiting options for programming. 

The Writers Guild of America, West issued the following statement regarding the proposed merger between Comcast and Time Warner Cable: "Comcast's proposed merger with Time Warner Cable is bad for everyone: content creators, programmers, suppliers, and consumers.  As writers know all too well, media consolidation leads to already too powerful companies limiting competition.  The WGAW will fight to stop this ill-conceived merger." 

The WGA East agreed with their West Coast brethren, issuing a statement: 

"Comcast/NBCUniversal want to further reduce competition at the expense of consumers and the people who create content...it would simply be wrong to give a giant corporation like Comcast/NBCUniversal even more clout in the marketplace, and in the workplace."

Even the conservative group Parents Television Council opposes the merger, saying that the deal "will invariably be anti-consumer and anti-family. " PTC president Tim Winter said in a statement, "Unless and until Comcast – or, for that matter, any other potential suitor of Time Warner Cable – agrees to allow customers to choose and pay for only the cable networks they want coming into their homes, the Parents Television Council will vehemently oppose any such merger."

So, why, exactly is the merger such bad news for consumers - and film fans, in particular? 

Economics 101 teaches us that less competition means higher prices. The companies said that the deal will be "pro-consumer, pro-competitive, and will generate substantial public interest benefits." Comcast assured that Time Warner customers will see faster Internet service, but it's questionable whether service will improve without higher prices.

Comcast already has a bad reputation when it comes to internet speeds -- see how far down on the list it ranks on Netflix's monthly ISP speed index

But the main reason film fans and lovers are quality content -- as well as creators of content -- should be concerned is that both companies have their own special programming interests -- Comcast owns NBC Universal and both Comcast and Time Warner have had past disputes with content providers over carriage agreements. 

These disputes have occasionally resulted in cable companies temporarily removing programming from their systems. So with consolidated power, the new company will have even more leverage to pressure content providers into deals -- meaning Comcast could demand higher fees from programmers (which would result in higher fees from consumers) and could theoretically, drop smaller programmers leading to fewer programming choices for viewers.

John Bergmayer, Senior Staff Attorney, Public Knowledge, a group which supports the openness of the internet, called on regulators to stop the deal and issued the following statement:

"If Comcast takes over Time Warner Cable, it would wield unprecedented gatekeeper power in several important markets.  It is already the nation's largest ISP, the nation's largest video provider, and one of the nation's largest home phone providers.  It also controls a movie studio, broadcast network, and many popular cable channels. An enlarged Comcast would be the bully in the schoolyard, able to dictate terms to content creators, Internet companies, other communications networks that must interconnect with it, and distributors who must access its content."

1 Comment

  • Nick | February 15, 2014 3:02 PMReply

    Interesting analysis. I think the concept here is monopsony http://en.wikipedia.org/wiki/Monopsony