The announced merger agreement between Comcast and Time Warner Cable (TWC) for $45 billion in stock will combine the nation\u2019s two of the nation\u2019s largest media companies.\u00a0 Each is a major cable multi-system operator (MSO) within an industry structured on the basis of local \u201cregulated\u201d monopolies, with little meaningful competition. \u00a0The merger will be one more step in the further consolidation of the media marketplace that includes \u201clast mile\u201d connections for wireline delivery, wireless communications, Internet access and, increasingly, programming.<\/p>\n
Comcast is the largest cable and home Internet service provider (ISP) in the U.S., with 2013 revenues of $64.6 billion. The new post-merger media behemoth will control 34 million cable subscribers throughout the country.\u00a0 Among the territories it currently controls are Boston, Chicago, Denver, Detroit, Houston and Philadelphia.\u00a0 In 2011, it acquired NBC-Universal Pictures from GE, including 33 local TV stations, the Spanish-language network, Telemundo, 13 cable networks (including USA, CNBC, Bravo, SyFy, MSNBC, CNBC, NBC Sports, Oxygen, the Weather Channel) as well as Universal, a major movie studio (and Focus Features, a boutique \u201cart house\u201d micro-studio) as well as the Universal theme parks in LA and Florida.\u00a0 It addition, it controls the Golf Channel, E! Entertainment, G-4, Style and regional sports cable services as well as the lifestyle website, Daily Candy.\u00a0 It also runs the Philadelphia Flyers NHL franchise and the NBA\u2019s Philadelphia 76ers.<\/p>\n
TWC\u2019s 2013 revenue were $22.1 billion and provides cable service in 29 states, with controlling interests in Dallas, Los Angeles and New York as well as large segments of Maine, North Carolina and Ohio.\u00a0 Under increasing financial problems resulting from its shotgun marriage with AOL, Time Warned spun off its TWC holdings in March 2009.<\/p>\n
Cable television emerged in the late-1940s as a \u201cretransmission\u201d service to improve the signal quality of over-the-air broadcast analog TV channels.\u00a0 Broadcast TV viewers often received signals that were dimmed or blocked because the local station\u2019s signal was weak or due to interference from natural obstacles (e.g., mountains). \u00a0In the 60-plus years since the first cable wires were strung, the industry slowly improved the carrying capacity of the underlying coaxial \u201ccable\u201d and, with digital technologies, enomously increased the number of channels it could offer.<\/p>\n
The cable industry\u2019s power is two fold.\u00a0 First, cable companies operate on the basis of an exclusive franchise negotiated with a particular locality.\u00a0 Second, cable companies long controlled in-home access to video programming through a subscriber\u2019s rental of the cable converter or set-top box.\u00a0 Until recently, the cable industry effectively limited competition by restricting programming sources to major media conglomerates and resisting alternative signal providers especially via the Internet.\u00a0 Today, the cable industry consists of two overlapping (and increasingly integrated) oligopolies: (i) cable multi-system \u201coperators\u201d (MSOs) or distribution companies and (ii) powerful \u201ccontent\u201d or programming companies exemplified by the Comcast-NBC-Universal merger.<\/p>\n
Under today\u2019s \u201cregulated\u201d media marketplace, cable monopolies face apparent competition from satellite companies like DirecTV and telecom companies like AT&T (Uverse) and Verizon (FiOS).\u00a0 To appreciate how dubious such competition is, in 2011 Comcast and TWC (along with Bright House and Cox) signed a co-marketing agreement with Verizon.\u00a0 Under the agreement, Verizon ceded competition over the delivery of broadband services in specific territories controlled by the cable companies for control over wireless services. \u00a0This contributed to Verizon\u2019s decision to stop building-out its competitive FiOS service.<\/p>\n
In all likelihood, the Washington, DC, No Theatre of public \u201cregulatory\u201d deception, the FCC and the Dept. of Justice will approve the merger.\u00a0 Comcast will likely divest 3 million subscribers to comply within terms of what is known as the \u201c30 percent rule\u201d that ostensibly assures industry competition.\u00a0 In addition, it is also expect to agreed to net neutrality requirements that it agreed to when it acquired NBC-Universal.<\/p>\n
However, the consequences of the merger are clean.\u00a0 As Free Press notes, \u201cComcast will have unprecedented market power over consumers and an unprecedented ability to exert its influence over any channels or businesses that want to reach Comcast\u2019s customers.\u201d\u00a0 Corporate executives and bankers will get rich, cable jobs will be cut through \u201cefficiencies\u201d and subscribers will get worse services at higher prices.\u00a0 And the U.S. status as a 2nd<\/sup>-rate telecom nation will only get worse.<\/p>\n ___________________________<\/p>\n David Rosen<\/i>\u00a0regularly contributes to the AlterNet, Brooklyn Rail, Filmmaker and IndieWire; check out\u00a0www.DavidRosenWrites.com<\/a>.\u00a0 He can be reached at\u00a0drosennyc@verizon.net<\/a>.<\/i><\/p>\n