Comcast’s competition isn’t cable companies — it’s Netflix
Comcast’s competition isn’t cable companies — it’s Netflix
Comcast is buying Time Warner Cable in a $45.2 billion deal that will unite America’s two biggest cable companies. A massive deal like this one will draw the keen interest of the Justice Department and FCC. They’ll look at the potential impact on competition.
But in our rapidly changing media world, defining competition and figuring out how this will impact us, the consumers, isn’t quite so simple.
To start, cable companies deliver a lot more than pay TV.
“This transaction is really all about broadband, not so much cable,” says Porter Bibb at Mediatech Capital Partners. “There may be a good five, even ten years of profitable business left for cable, but the business is rapidly transitioning into broadband.”
Antitrust regulators are also looking beyond cable. Down the road, depending on agreements Comcast makes and court rulings, a bigger Comcast could make life harder for streaming services like Netflix. It could slow down Netflix access for Comcast customers with the goal of advantaging Comcast’s own streaming offering.
“This makes the fate of companies like Netflix very uncertain, because in order to reach us as subscribers, they’ve gotta go through that gatekeeper,” says Susan Crawford, visiting professor at Harvard Law School and author of “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.”
She and other merger-skeptics worry that a new cable giant could hurt innovation and raise prices for all of us.
On the other hand, a bigger Comcast could also play hardball with ESPN and other networks in negotiations over subscriber fees, which determine what consumers actually pay for cable. Scaling up would enables Comcast to drive a harder bargain in those tough fights that sometimes blackout channels. If the larger company gets a better bargain from cable networks, it could pass the savings on to consumers.
“A bigger buyer that’s able to get lower prices is probably gonna benefit consumers,” says University of Iowa antitrust law professor Herb Hovenkamp.
Regulators will weigh all of this. It’s likely they’ll ultimately approve the deal, but only with concessions from Comcast. Cable TV may be shrinking, but broadband is exploding, which means how the feds treat this deal will impact all of us.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
