NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Wednesday, February 12th, 2014

Comcast plans to acquire Time Warner Cable for $44 billion; FCC and DOJ should veto deal

Media and telecom­mu­ni­ca­tions con­glom­er­ate Com­cast, the nation’s largest provider of cable tele­vi­sion and the own­er of NBC Uni­ver­sal, has just announced it has agreed to acquire the nation’s sec­ond largest cable tele­vi­sion provider, Time Warn­er Cable, in a $44 bil­lion plus all-stock megadeal. Bloomberg reports:

Com­cast is pay­ing about $159 a share in the trans­ac­tion, which will be announced this morn­ing, said the peo­ple, who asked not to be named because the nego­ti­a­tions were pri­vate.

Com­cast beat rival Char­ter Com­mu­ni­ca­tions Inc. (CHTR) to what is the sec­ond-largest cable-tele­vi­sion acqui­si­tion by equi­ty val­ue, accord­ing to data com­piled by Bloomberg. Stam­ford, Con­necti­cut-based Char­ter, the fourth-largest U.S. cable com­pa­ny, had offered about $132.50 a share to Time Warn­er Cable’s man­age­ment, a bid that was reject­ed.

If the deal goes through, Com­cast would utter­ly dom­i­nate the cable tele­vi­sion mar­ket as a near monop­oly, with near­ly three quar­ters of pay­ing cus­tomers. That’s accord­ing to the Nation­al Cable Tele­vi­sion Asso­ci­a­tion.

But the deal should not go through. It is an attempt by Com­cast to become ever larg­er and more pow­er­ful… and Com­cast is already too large and too pow­er­ful. As Rupert Mur­doch’s The Wall Street Jour­nal has not­ed:

The deal faces high reg­u­la­to­ry bar­ri­ers. Com­cast not only serves more pay TV cus­tomers than any oth­er com­pa­ny in the U.S., near­ly 22 mil­lion video sub­scribers, but it also owns enter­tain­ment com­pa­ny NBCU­ni­ver­sal, par­ent of the NBC broad­cast net­work and sev­er­al big cable chan­nels as well as Uni­ver­sal film stu­dio.

Time Warn­er Cable serves about 11 mil­lion video sub­scribers, although as part of the deal, Com­cast has agreed to divest three mil­lion sub­scribers, the peo­ple said. Those divesti­tures will keep its own­er­ship of the pay TV mar­ket below 30%, the peo­ple said.

Com­cast hopes to con­vince reg­u­la­tors that because cable com­pa­nies don’t com­pete, their deal should go through.

The Fed­er­al Com­mu­ni­ca­tions Com­mis­sion and the Depart­ment of Jus­tice should put a stop to this deal, just as they suc­cess­ful­ly opposed AT&T’s anti­com­pet­i­tive plan to acquire T‑Mobile. Reg­u­la­tors must not for­get that Com­cast is much more than a cable com­pa­ny. It is a phone, tele­vi­sion, Inter­net, and media com­pa­ny with vast hold­ings and a ven­ture cap­i­tal arm with invest­ments in dozens of oth­er com­pa­nies, as you can see from Colum­bia Jour­nal­ism Review’s Who Owns What.

Our friend Craig Aaron, who serves as Pres­i­dent of Free Press, suc­cinct­ly explained why this tie-up should not be allowed in a state­ment released a lit­tle bit ago:

In an already uncom­pet­i­tive mar­ket with high prices that keep going up and up, a merg­er of the two biggest cable com­pa­nies should be unthink­able. This deal would be a dis­as­ter for con­sumers and must be stopped.

This deal would give Com­cast con­trol of more than a third of the U.S. pay-TV mar­ket and more than half of the U.S. triple-play mar­ket for video, voice and Inter­net ser­vice.

Com­cast will have unprece­dent­ed mar­ket pow­er over con­sumers and an unprece­dent­ed abil­i­ty to exert its influ­ence over any chan­nels or busi­ness­es that want to reach Com­cast’s cus­tomers.

No one woke up this morn­ing wish­ing their cable com­pa­ny was big­ger or had more con­trol over what they could watch or down­load. But that — along with high­er bills — is  the real­i­ty they’ll face tomor­row unless the Depart­ment of Jus­tice and the FCC do their jobs and block this merg­er. Stop­ping this kind of deal is exact­ly why we have antitrust laws.

Amer­i­cans already hate deal­ing with the cable guy — and both these giant com­pa­nies reg­u­lar­ly rank among the worst of the worst in con­sumer sur­veys. But this deal would be the cable guy on steroids — pumped up, unstop­pable and grasp­ing for your wal­let.

We agree. The FCC and DOJ must put a stop to Com­cast CEO Bri­an Roberts’ empire build­ing. They have allowed Roberts to con­tin­ue enlarg­ing Com­cast through acqui­si­tions for too many years. It’s time they object­ed and said no more.

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