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February 24, 2014

In Our Opinion: Cable merger warrants some scrutiny

The Daily Star

---- — Comcast, the biggest cable entertainment outfit in the United States, wants to take $45 billion out of petty cash to purchase Time Warner, a smaller cable outfit that dominates our local market.

Perhaps the most surprising aspect of the proposed sale for local Time Warner customers is that somehow Comcast executives were able to reach a real, live Time Warner representative on the phone.

Customer service issues aside, the deal would create a cable company of gargantuan proportions. Comcast has previously acquired movie studios, broadcast (including NBC) and cable television networks and theme parks.

If the merger is approved by the Justice Department and Federal Communications Commission, Comcast would own about a third of the country’s broadband subscribers and 30 million pay TV subscribers, according to published estimates.

“It just creates this massive player — this one entity that sits at the crossroads of everything,” said Michael Weinberg, a vice president at Public Knowledge, a Washington, D.C. digital advocacy group that opposes the merger. “They don’t just dabble in it. They dominate it.”

Comcast and Time Warner Cable don’t compete head-to-head here or anywhere else, so given that Time Warner already has something of a monopoly in the local cable market — and there is competition from satellite companies for most of the same services cable provides — perhaps we won’t see a rapid rise in our cable bills.

But then again …

Comcast could eventually charge more for streaming video from Netflix, YouTube and Amazon, among others content providers who might have nowhere else to go.

Comcast, as part of its deal to acquire NBCUniversal, promised not to hike those prices until at least 2018.

Comcast suggests that a merger with Time Warner would be swell for customers because of Comcast’s superior video-on-demand service and its improving broadband internet speed.

But Comcast Vice President David Cohen made us a bit wary when he told reporters last week that “we’re certainly not promising that customer bills are going to go down or even increase less rapidly.”

People love to hate their cable companies, often with good reason. Maybe it was the cable going out during a ball game, or an annoying weather alert that could be done less obtrusively, or a slower than slow Internet, or longtime customers not offered inexpensive rates available to new clients.

“I think there needs to be an aggressive approach from the government in putting conditions on this merger, Eric Sherman, CEO of health and lifestyle network Veria Living, told Adweek. “If you’re going to give someone so much power in the marketplace, you have to make sure it’s fair.”

We hope the Justice Department and FCC take a good, long look before agreeing to this sale.