Cable TV merger would also join Internet giants
On the face of it, the merger of the two largest U.S. cable companies would seem like a non-starter, given its steep regulatory hurdles and skepticism from consumer watchdogs.
But Comcast’s proposed acquisition of Time Warner Cable comes at a moment of seismic change in the television industry, with consumers increasingly cutting their cable cords and instead streaming their favorite shows via the Internet through services like Netflix, YouTube, Amazon and Hulu.
This shifting landscape may aid Comcast as it seeks to persuade government officials — and deploys its prodigious army of lobbyists — to get its $45 billion takeover approved.
“I believe television will change more in the next five years than in the last 50,” Brian L. Roberts, Comcast’s chief executive, has said.
Still, the combination of the two companies, creating a cable and broadband behemoth serving 30 million customers across 42 states, is expected to come under intense scrutiny from the Obama administration, which has toughened its enforcement of federal antitrust laws.
But much of the focus Thursday on how the proposed deal would affect competition in cable TV overshadowed what could be a more important consideration for regulators: the merger’s effect on broadband Internet service, which is rapidly becoming the most important pipe running into the homes of most U.S. consumers.
A merged Comcast and Time Warner Cable would have nearly twice as many high-speed Internet subscribers as the next largest company and would control roughly 38 percent of the high-speed Internet market, according to figures compiled by the Leichtman Research Group, an independent firm in Durham, N.H. The combined companies would account for nearly 32 million broadband customers, compared with 16 million for AT&T and 9 million for Verizon.
The effect of the deal on cable-TV and Internet service prompted many consumer advocacy organizations to immediately express hostility toward the deal.
“This industry is notoriously unpopular with consumers due to poor customer service, not to mention ever-increasing bills, and a deal this size doesn’t exactly convince us that things will get better,” said Delara Derakhshani, policy counsel for Consumers Union.
Washington lawmakers also said they would give it close scrutiny. Sen. Amy Klobuchar, D-Minn., chairwoman of the Senate Antitrust Subcommittee, said that because the proposed merger “could have a significant impact on the cable industry and affect consumers across the country,” she plans to convene a hearing to examine the deal.