Power, pricing at play in $45B Comcast deal
LOS ANGELES — With a single behemoth purchase, Comcast is forging a dominant force in American entertainment and presenting federal regulators with an equally outsized quandary: How should they handle a conglomerate that promises to improve cable TV and Internet service to millions of homes but consolidates unprecedented control of what viewers watch and download?
Comcast, which was the nation's No. 1 pay TV and Internet provider, says its $45.2 billion purchase of Time Warner Cable will provide faster, more reliable service to more customers and save money on TV programming costs. If the acquisition is approved, Comcast will serve about 30 million pay TV customers and 32 million Internet subscribers.
But industry watchdogs say the deal will give the company too much power and ultimately raise the price of high-speed connections.
“How much power over content do we want a single company to have?” said Bert Foer, president of the American Antitrust Institute, a Washington-based consumer-interest group.
The all-stock deal approved by the boards of both companies trumps a proposal from Charter Communications to buy Time Warner Cable for about $38 billion. It represents another giant expansion on Comcast's $30 billion purchase of NBCUniversal, operator of networks including NBC, Bravo and USA, which was completed in March.
Comcast says it will continue to operate under conditions the government imposed when it approved that transaction, including a requirement that it provide standalone Internet service without tying it to a pay TV package, make programming available without discrimination to other providers and treat all Internet traffic the same, even for video competitors such as Netflix. However, those conditions expire in 2018, and Comcast CEO Brian Roberts was not prepared to extend those voluntarily in a conference call with journalists.
Roberts argued that the cable industry has been losing TV subscribers for the past decade because of increased competition from satellite TV providers that include DirecTV and Dish and telecom companies such as AT&T and Verizon. Despite gaining subscribers in the final quarter of last year, the forecast is to lose more in 2014.
While video services are competitive, they are becoming less important for cable operators as higher programming costs cut into profits. On the other hand, Internet services are highly profitable and, in many markets, cable companies offer the best speeds available.
“In most places outside of a few big metro areas, you've only got cable as the only game in town,” said Craig Aaron, president of Free Press, a public-interest group that focuses on the media industry. “I don't see there on their list of proposed consumer benefits prices going down.”
In fact, Comcast Executive Vice President David Cohen told reporters on a conference call that Internet-service prices will likely keep rising.
“We're certainly not promising that customer bills are going to go down or that they'll increase less rapidly,” Cohen said.
In an interview, Cohen argued that cable companies shouldn't be “punished” for being the dominant player in too many markets and noted that competitors such as AT&T had twice the annual revenue of Comcast before the deal, with plenty of cash flow to improve their own broadband networks.
“Somehow we're going to put them at a competitive disadvantage? I think one of the strengths of the transaction is it puts us in a better position to compete against them,” he said.
Antitrust lawyers say that prices for Comcast's services will probably be one focus of a review expected to be handled by the Justice Department.
“If there's no claim of consumer gain at all, they'll have trouble gaining the Justice Department's approval,” said Keith Hylton, an antitrust expert and professor at the Boston University School of Law.
Antitrust attorney Michael Keeley of Axinn, Veltrop & Harkrider in Washington predicted that the Federal Communications Commission will use its review of the deal to extract concessions such as an extended promise to treat all Internet traffic fairly after the commission's rules on the subject were struck down by a federal appeals court.
The Justice Department and the FCC declined to comment.
The deal is expected to close by the end of the year, pending shareholder and regulatory approvals.
“I am confident that the transaction announced today will expand Comcast's ability to deploy its advanced technology and serve its customers around the country,” said Sen. Pat Toomey, R-Lehigh County. “This is good for the world-class workers in Philadelphia and Comcast customers around the state.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Scientists hope tiny robotic bee’s big dreams take flight
- Utah woman gets 5 years in baby sitter’s overdose death
- Scathing report says college trustees fail in mission
- Boston Marathon suspect’s friend guilty of obstruction
- Don’t eat tuna, Consumer Reports tells mothers-to-be
- California attorney general to appeal ruling on death penalty
- Police say couple wanted Amish girls for slaves
- $1T cost to sustain fighter jet in cross hairs
- GPS stations show drought-stricken California — not pushed downward by 63 trillion gallons of water — is rising
- States can apply for more time before using student scores to evaluate teachers
- EPA cites risks from air toxics in urban areas, improvements