In a deal that could shake up the Cable Television business, powerhouse provider Comcast is attempting to acquire the smaller, but still formidable Time Warner Cable in a $45 Billion stock deal. The deal would add around 11 million subscribers to Comcast’s current 22 million, covering about a third of households in the United States.
The merger not only affects the television business, but it also disrupts the high-speed Internet market. By combining the two providers Comcast would own about 38 percent of the market, giving them the power to control customer prices in addition to negotiating power over one of their main competitors, Netflix. Comcast’s Executive Vice President, David L. Cohen, says that the deal is “pro-competitive, pro-consumer, and strongly in the public interest.”
But is it really in the public’s best interest to have two of the most powerful cable companies form a monopoly over the cable industry? Will merging really benefit the consumer? Most likely not.
The deal has been criticized by many, such as FCC officials, who claim that Comcast would eliminate competitiveness in the cable sector. Comcast would be able to regulate content and prices, with minimal effort, and eventually force other content providers to consolidate or face bankruptcy proceedings.
Although competitors and content providers of Comcast are both greatly affected, the biggest losers of this deal are the consumers. The new authority Comcast receives from this deal comes with the very real possibility that it will be abused. Comcast would most likely increase their subscription prices, and with a lack of competition, and in many instances substitutes, consumers would be forced to either pay the higher fee or give up their television (the latter of which we know won’t happen).
This wouldn’t be the first time Comcast has committed such free market abuses; they once manipulated prices in Pennsylvania’s cable market. In Philadelphia, they controlled the local SportsNet channel, which was home to all broadcasts of local professional sports teams. Initially, Comcast declined to give access of this channel to their competitors, DirectTV and Dish Network. However, the FCC eventually stepped in and forced Comcast to offer the channel to their competitors, but the price Comcast demanded was far too high; as a result, many Philadelphia fans decided to not pay for the channel (so much for the “city of brotherly love”).
Ultimately, the merger causes more issues than solutions. The lack of actual competition in the market gives Comcast too much power over its competitors, subscribers, and potential customers. The FCC must step in and stop this deal, or we will witness a meteoric hike in subscription rates.