Scrutiny meets Comcast bid for Time Warner Cable

Feb 13, 2014
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Scrutiny meets Comcast bid for Time Warner Cable

Feb 13, 2014

Comcast is trying to buy Time Warner Cable for $45 billion. Comcast, already the No. 1 cable provider in the U.S., will get 8 million more subscribers and 30 percent of the market. That figure includes a proposed divestment of about 3 million customers that Comcast is offering to assuage anti-competition concerns.

Comcast would get access to cable markets in Los Angeles and New York City, and together the companies would save $1.5 billion in operating costs, more than half of which would be saved in the first year according to Comcast CEO Brian Roberts.

It’s the latest in a multi-decade trend of consolidation in the cable industry, as alternate platforms from satellite to internet streaming to Netflix have eroded the viability of the cable business model.  

The merger will place Comcast in a stronger bargaining position with content providers, which have waged bruising battles with cable carriers over fees. Hundreds of thousands of Time Warner Cable customers last summer experienced a blackout of all CBS programming after the cable company refused to pay what CBS was demanding to carry its content. 

Though Time Warner Cable and Comcast CEOs have both brushed off any risk that regulators wouldn’t approve the deal, but such a high profile deal is certain to undergo significant scrutiny both by the public and by regulators. The Justice Department will review antitrust concerns, and the Federal Communications Commission will look at the deal from a public interest perspective.  

Comcast and TWC both argue that competition won’t be reduced because Time Warner Cable and Comcast don’t actually compete to begin with; their markets are geographically segregated.  That is not to say, of course, that competition for customers is vibrant. Within regions, there is little to no competition among providers which operate as local monopolies.

There is nothing in the deal that indicates consumer opinion would be tempered by the merger. Consumer surveys show Comcast and TWC as the two least liked companies in one of the country’s least liked industries.   

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