Regulators might be tempted to agree with Comcast that its proposed acquisition of Time Warner Cable for $45.2 billion in stock poses no threat to competition and would actually benefit consumers by giving the company more resources to invest in new services. But government officials should not accept that argument without conducting a thorough investigation into what effect a merger between the country’s two largest cable companies would have on the media and the Internet.
Comcast’s chief executive, Brian Roberts, on Thursday said that his company and Time Warner Cable do not operate in the same ZIP codes. But the issue with cable mergers is not that they reduce or eliminate head-to-head competition for subscribers, because most cities have just one cable provider. This deal is important because it would give Comcast greater power over media companies like CBS and Disney and Internet services like Netflix and Amazon. And that would ultimately give it more control over American consumers.
If the government approves this deal, Comcast will operate in 43 of the 50 largest metropolitan markets, and will have about 30 percent of the national pay television subscribers and about one-third of all broadband Internet subscribers.
Because it would control such a large chunk of the country, Comcast would have significant leverage in contract negotiations with media companies over what TV channels cable companies are willing to carry and how much they pay for them. Such contract talks have become increasingly acrimonious in recent years. For example, in August Time Warner Cable temporarily pulled CBS programing from its cable systems in New York, Los Angeles and Dallas because the two companies couldn’t agree on the terms of a new contract.