YOU DECIDE: The Comcast Merger
Should Comcast be Allowed to Merge with Time Warner Communications?
Does your family have cable in your home? How about Internet access? If so, the recent announcement that the country’s number one communications company Comcast has acquired the second-latest communications company Time Warner Cable might affect what you see (and how much you pay).
credit: Danil Melekhin/Getty Images; how much power and influence should Comcast have? Will the merger with Time Warner be allowed?
Comcast offered $45 billion to Time Warner in what is called an “all-stock dea,l” meaning they will pay $159 per share of stock traded on Wall Street. Before the deal can be made final, it must be approved by the Federal Communications Commission (the FCC). The challenge for the U.S. government regulation agency is to weigh the benefit to consumers on one hand with the threat of a monopoly on the other. The announcement of the merger has been met with mixed (and very vocal) reactions on both sides of the issue.
Read through the arguments outlined below and take the poll question at the bottom of the post to indicate your opinion. You Decide!
YES
- Different Markets – Usually, when one company acquires another, competition is reduced. But Comcast and Time Warner are mostly not offered in the same cities, so this would not directly affect competition.
- More Choices – Comcast’s access to Time Warner’s high-speed Internet connections will allow more bargaining power with content-producing networks. This could lead to increased opportunities for cross-media buys. When Comcast acquired NBC Universal, it supported 10 new independent networks, the majority owned by women or minorities.
- Emerging Technologies – Programing made exclusively to stream online is quickly becoming a big source of potential revenue. Comcast has a good reputation for being interested in future technology and increasing capacity. The cable company has upgraded its Internet speeds 12 times in the past eleven years. The merged companies would have more high-speed Internet subscribers than cable subscribers.
- Appropriate Fit – This merger is a said to be a more appropriate match for Time Warner than the recent attempted acquisition by Charter Communications. that cable company possessed a great deal of debt. Comcast also stands to save a reported $1.5 billion in operating expenses.
NO
- Less Competition – If you don’t like your cell phone provider or bank, it is easy to switch. Because potential cable subscribers are limited by the reach of a service area, if you aren’t happy with your cable provider, you don’t have many (if any) other choices. While some markets have smaller providers, larger companies have been buying them up in recent years. The reduction of the number of competing communications companies will likely cause prices to rise.
- Lack of Access – If the merger is allowed by the FCC, Comcast would be in a stronger position to deny rival distributors or smaller networks access to programming if they wanted to. Further consolidation in the future will ultimately lead to the larger companies having greater control over what subscribers have access to. Last year, in a “carriage dispute” with the network CBS, Time Warner blocked all CBS programming to subscribers in New York, Los Angeles and Dallas for one month.
- Inadequate Support – Serving the customer service needs of the combined 30 million subscribers could prove a difficult challenge. Both Comcast and Time Warner already have received bad press for less-than-stellar customer service reviews.
- Threat to Net Neutrality – Since its earliest days, the Internet has been an “open medium,” protected under the First Amendment. As the data pipelines become more and more controlled by fewer companies, a reduction in creativity and diversity of media might occur.