The Comcast/TWC Merger: As Big Cable Gets Bigger, Your Bill Will, Too
The biggest cable operator in America announced an agreement last week to buy the second biggest. Should you feel good about that?
Comcast and Time Warner Cable say, yes, you should: It’s not like you can choose between them today.
“We have no direct overlap,” Comcast CEO Brian Roberts said on a Thursday-morning conference call as he outlined his Philadelphia firm’s plan to buy its New York non-rival for about $45.2 billion in stock.
Public-policy VP David Cohen echoed the point minutes later: “We’re not removing a choice from any consumer.”
That is absolutely and unfortunately correct. In many ways, this proposed union of the No. 1 and No. 2 pay-TV companies in America would not make cable TV any worse. But it couldn’t make it much better, either. This deal’s most likely effect would be to pour another layer of cement around policy and market failures that began decades ago.
Start with the most obvious question you may have: Will my cable bill go up as a result of this? Answer: Yes, it’s only a question of degree. Cohen himself said so on the third of three calls Thursday: “We’re certainly not promising that customer bills are going to go down, or even that they’re going to increase less rapidly.”
The best-case scenario here is one Cohen may not want to make publicly: The combined firm’s power — even after divesting 3 million TWC subscribers in smaller markets, Comcast would have some 30 million “subs” and close to 30 percent of the pay-TV market — should help it tell networks seeking higher carriage fees to go pound sand.
“Everyone assumes that market power is always bad,” said Berin Szoka, president of the Washington think tank Tech Freedom. Here, though, “market power for cable operators can really be good for consumers.”
He’s right there: Semi-popular channels love to demand ever-higher payment — not to mention placement in standard bundles — or they’ll let a carriage agreement expire. It’s harder for a network to use that kind of brinkmanship to lay claim to other people’s money as its potential lost audience increases.
(Note that Szoka, like me, dropped subscription-TV service years ago. As cord cutters, we’re largely insulated from those fights, if not from varying over-the-air reception and a spotty online selection.)
But Comcast and TWC also constitute part of the content-cost problem. Comcast owns NBCUniversal, and both firms also own regional sports networks — a leading contributor to ever-escalating pay-TV bills. Time Warner Cable, for example, is about to launch a new SportsNet LA network as part of an $8 billion deal with the Dodgers that will add $4 to $5 a month to the area subscriptions.
Here are some more questions you may have about the merger:
Will service overall improve? The record here doesn’t allow for much optimism. Comcast and TWC bring up the rear in the American Customer Satisfaction Index’s annual surveys; in 2013, they netted scores of 63 and 60 out of 100 for TV service and 63 and 62 for Internet access.
That same year, the worst-rated health-insurance company, Aetna, had a score of 69; the worst investor-owned power utility, Consolidated Edison, had a 70. This cable duo can, however, take comfort in being no worse than some airlines: United scored 62 last year.