Comcast acquisition of TWC could have negative impact

By Johnny McCabe

Wikimedia Commons
Wikimedia Commons

On Thursday, Comcast announced its unprecedented decision to acquire longtime competitor Time Warner Cable in a merger valued at $45 billion. Along with the entirety of Time Warner’s stock holdings, Comcast will bring its 11 million cable subscribers into the fold, upping the total subscriber count for the Comcast/Time Warner hybrid to a staggering 30 million television and internet users, just under 30 percent of the total cable and internet market share in the United States.

The terms of the merger have already been finalized by each constituent, leaving it up to the FCC to approve the transaction, which could become reality by the end of this year. With the memory of recent NSA surveillance revelations fresh in people’s minds and the consequences of the FCC’s controversial net neutrality rulings on the horizon, Comcast’s promises of higher quality cable content and faster internet seem all too much like the false sympathies of a future media behemoth.

Comcast CEO Brain Roberts, however, is doing his best to alleviate both consumer concerns and regulatory flak. “In addition to creating a world-class company,” Roberts said in a press release, “this is a compelling financial and strategic transaction for our shareholders.” Comcast also plans to appease regulators by offloading as many as 3 million of its potential cable subscribers to Charter Communications, Inc., a Connecticut-based cable provider who lost out on the Time Warner deal. Doing so would keep the Comcast/TWC hybrid just under federal limits designed to prevent monopolies and market dominance, thus technically making the merger viable to the FCC. In actuality, however, the true extent of Comcast’s control would be much more disconcerting.

Comcast’s central rationale in supporting the ethical veracity of the merger is that it is already the dominant cable and internet service provider in the majority of the areas in which it operates. Since there is little to no overlap between these areas and Time Warner’s, there is no foreseeable impact on any prospective competitor.

The one catch is that there are no prospective competitors: Comcast and Time Warner already shared between them the overwhelming majority of market areas in the country, even if there was no overlap of one against the other. This merger, along with Comcast’s acquisition of NBC Universal in 2011, is a textbook example of vertical consolidation; Comcast owns every aspect that goes into media programming, from production all the way down to distribution. This allows it to tailor-make content for its own services and exert an incalculable amount of influence over new media, television programming and internet technology. Controlling every aspect of its own service to such an extent as would be feasible by the merger would allow Comcast to effectively subsidize its own production costs within itself, generating upwards of “$1.5 billion in operating efficiencies a year,” the company told the Washington Post.

At this point, it becomes hard to imagine a future in which one single entity possesses so much clout in shaping the future landscape of internet and television. This consideration becomes all the more grave with recent accusations over the sanctity of “net neutrality” and allegations that some ISPs have been selectively throttling the bandwidth capabilities of streaming services like Netflix. As formidable as companies like Netflix and even Google are, they exist primarily in a digital format and are beholden to the whims of service providers (like Verizon, AT&T and of course, Comcast) to deliver their content to the consumer.

The predominant fear is that massive providers, not unlike Comcast, can selectively favor their own content with faster internet speeds and higher quality streaming, effectively strangling the competition. For the immediate future, Comcast was sure to clarify in the press release that the new company post-merger will be committed to the net neutrality statutes that were voluntarily adopted after the NBC merger, but this is little more than an empty promise: when the statutes expire in 2018, Comcast will not be under any legal obligation to renew them and will be able to conduct itself completely uninhibited.

The Comcast/Time Warner merger is an extremely worrisome proposition. If verified by the FCC, it will have unprecedented long-term effects for the American consumer. Despite the absence of short-term consequences on television and cable service, the buyout consolidates power, stifles competition and smothers the floundering principles of a free and open Internet. Comcast has given us its word that this abysmal future will not be the case; however, it’s not a word I’m inclined to take.

Johnny McCabe is a Collegian columnist and can be reached at [email protected]