Will Comcact–Time Warner Merger Kill Competition or Is It Already Dead?

Moneybox
A blog about business and economics.
Feb. 13 2014 7:44 AM

Comcast–Time Warner Merger Will Take Cable Competition From Zero to Double Zero

Comcast
We're No. 1! And now we're getting No. 2.

Photo by Justin Sullivan/Getty Images

The news broke last night that America's No. 1 cable provider, Comcast, is going to buy the No. 2 cable provider, Time Warner, in a $45 billion all-stock deal. Everyone's first reaction is naturally to roll their eyes at the competition implications of the two biggest players in a not-so-competitive field merging.

But Comcast is aware of this. They say that as part of the merger they will divest themselves of 3 million out of Time Warner's existing 11 million subscribing households. Thus the merged entity will serve about 30 million households, and there will be no direct elimination of competition.

Advertisement

The main thing that divestment plan should remind you of is that merger or no merger, cable television competition has proven to be largely a mirage. On a practical level, cable TV looks a lot like local telephone service in the old days. Sure there were a bunch of different companies—Pacific Bell, NYNEX, Bell Atlantic—but they didn't actually compete with each other, they just divvied up the country.* The merger proposed here will in effect turn two medium-size regional monopolists into a big sprawling monopolist. But in terms of consumer-facing competition, you're going from zero to two times zero.

The more interesting implications are probably on the other side of the stack. Cable providers are always fighting with major networks carriage fees and such. In other words, the terms under which A&E or CNN or some other prominent channel gets on your cable system. A much larger cable company will have more clout vis-à-vis the networks in these fights, and that's especially true since the cable giant would also own the NBC Universal family of channels. It's not obvious to me that greater concentration of clout would be bad public policy or bad for consumers, but it's not obvious to me that it would be good either. The Federal Communications Commission is going to take a good, hard look at this deal, and alongside the precise terms of the divestment proposal I think that's what they'll be looking at.

*Correction, Feb. 13, 2014: An earlier version of this post described NYNEX and Bell Atlantic as part of the old “Ma Bell” when in fact they were successors to it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

The Right to Run

If you can vote, you should be able to run for public office—any office.

Move Aside, Oxford Comma, the New Battle Is Over Single or Double Quotes

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Ben Bradlee’s Fascinating Relationship With JFK

Culturebox

The Simpsons World App Is Finally Here

I feel like a kid in some kind of store.

Technology

Driving in Circles

The autonomous Google car may never actually happen.

My Father Invented Social Networking at a Girls’ Reform School in the 1930s

How Punctual Are Germans?

  News & Politics
The World
Oct. 22 2014 11:57 AM Why Wasn't the WHO Ready for Ebola?
  Business
Moneybox
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
  Life
Atlas Obscura
Oct. 22 2014 12:03 PM Colonia Fara: An Italian Summer Camp for Happy Little Fascists
  Double X
The XX Factor
Oct. 22 2014 10:00 AM On the Internet, Men Are Called Names. Women Are Stalked and Sexually Harassed.
  Slate Plus
Working
Oct. 22 2014 6:00 AM Why It’s OK to Ask People What They Do David Plotz talks to two junior staffers about the lessons of Working.
  Arts
Behold
Oct. 22 2014 11:04 AM Do All U.S. Presidents Look the Same? What About Japan’s Prime Ministers?
  Technology
Technology
Oct. 22 2014 10:29 AM Apple TV Could Still Work Here’s how Apple can fix its living-room product.
  Health & Science
Science
Oct. 22 2014 11:30 AM Where Does Ebola Hide? My nerve-wracking research with shrieking bats.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.