So much for the worries over a Comcast-Time Warner merger. Bloomberg news reported Thursday, April 23 that Comcast is calling off its plans to absorb Time Warner because of federal government opposition to the $45.2 billion deal.
As The New York Times figures it, after the merger Comcast would have ended up with 57 percent of the nation’s broadband market, and just under 30 percent of the pay television market. The deal would have had a big impact across New York. Comcast would have gained 2.2 million Time Warner customers in the state. If the merger succeeded, the New York market would have amounted to about 8 percent of Comcast’s cable and broadband business.
One issue raised by merger opponents was that Comcast broke promises made to the federal government when it acquired NBCUniversal. Sen. Al Franken, the Minnesota Democrat and the leading opponent of the merger, cited some of Comcast’s broken promises in an opinion piece for TechCrunch. He notes that Comcast lied about promises to fairly locate cable channels that compete with NBCUniversal’s networks. For example, Franken said, Comcast gave CNBC network a prime spot on its lineup and pushed CNBC competitor Bloomberg TV to the back channels. Franken saw that as a breach of Comcast’s promise to put similar channels near each other.
Franken wrote that if Comcast was allowed to buy Time Warner Cable,
This colossus of a company would have unmatched power to destroy its competition, abuse its customers, and bully the government agencies charged with regulating it. Consumers would face even higher prices, even fewer choices, and, if you can believe such a thing is possible, even worse service.
The merger’s collapse frees New York regulators from their promise to thoroughly review the deal. Public Service Commission officials threatened to block the merger in New York if it was found not in the “public interest.” But the commission never decided the matter. PSC chairwoman Audrey Zibelman said the commission was waiting to see how the federal government handled the issue.
Public Service Commission staff worried that the merged company would “discourage new entries into these markets, stifling technological innovation and further competition, while keeping prices artificially high.” The PSC staff also noted that Comcast promised to boost capital spending on its system if the merger was approved, but did not make any specific commitments. There’s a good argument that the discussion over the merger overlooked some big issues facing consumers, including high prices, poor customer service and misleading bills.
Downplayed in some stories about the merger’s collapse is whether it made economic sense given growing customer defection from cable TV. Lots of cable customers are ditching traditional cable TV in favor of Internet services like Netflix, Hulu, and CBS All Access that offer all the programming they want for a lot less money. With more people getting TV over the Internet, one has to wonder whether Time Warner was worth Comcast’s price.