Back in November of 2013, the rumor started circulating that cable giant Comcast was going to try to buy Time Warner Cable (TWC). This was news because Comcast, in addition to owning NBC Universal, is the nation’s largest cable provider and Time Warner Cable is the nation’s second largest.
(Before we go any further, let’s make one thing clear. Time Warner Cable is a company that provides cable TV and Internet services to subscribers in New York, Dallas, Los Angeles, North Carolina, Maine, and Ohio. It is not the general media giant Time Warner that owns the Turner Broadcasting properties and Warner Brothers movie studio. So why the Time Warner in Time Warner Cable? That’s easy. Time Warner the media company owned TWC up until 2009, when it spun off the cable/Internet provider into its own company.)
Then on Thursday, February 13, Comcast announced that it had reached an agreement to purchase TWC for more than $45 billion in stock. If the transaction is approved by the FCC and the U.S. Justice Department, Comcast would have control of the programming going out to as many as 33 million cable subscribers. (Why is that number in doubt? There are roughly 100 million cable subscribers in the US. If Comcast controls more than 30 percent of those subscriptions, it could run into regulatory problems. So if the merger goes through, Comcast is likely to sell off approximately 3 million subscribers to fall below that magical 30 percent figure.)
Media reporter Ken Auletta says the proposed purchase would give Comcast a couple of key advantages:
- More subscribers would give Comcast more negotiating power with both television program providers and Internet program providers.
- It would give Comcast access to TWC’s powerful video-on-demand service that lets consumers have access to programming they want to see without being able to skip commercials.
One thing the deal probably won’t do is make you like your cable company any better. The merger won’t give customers any more choices in who they can buy cable service from. Local service will continue to be a monopoly negotiated between a single service provider and the municipality. And consumer advocates argue that the merger would likely lead to higher prices to consumers.
AdAge magazine had one of the most interesting takes I’ve seen on the merger, arguing that even with 30 million plus subscribers, Comcast still wouldn’t be big enough to deal companions like Google, Apple, Facebook and Amazon.