A Monopoly in the Making: The Comcast-Time Warner Cable Deal

So many logos!

Today is a monumental day in the world of cable television broadcasting as Comcast announced that it will purchase Time Warner Cable in a $45.2 billion dollar deal.  The companies, currently the two largest cable providers in the U.S., each carry 22 million and 11 million customers, respectively.  The combination will make  Comcast the unprecedented frontrunner in the United States by providing to 30% of TV homes and almost 40% of all broadband homes.

The deal, announced today, created a large buzz discussing the legality of the whole situation.  While the deal will most likely go through a judicial review most believe that the deal will go through and turn official.  That begs the question, is a cable company with this much power a bad thing?

comcast-and-twc-maps-1

My family and I have already had our fair share of complaints of Comcast in the past, angered by the fact that we can’t drop them as there are no other options available for cable.  Now, with the second largest cable provider being enveloped into them, those problems could persist and even expand.  There was little to no overlap between Comcast and Time Warner’s market audience, as the market maps shown above.  Once this deal is closed Comcast will have a gripping hold of the Eastern Seaboard as well as major markets in California, New York, and Texas.  This creates the worry of what a company that large is capable of.  Issues such as withholding programming or choosing what content is seen and when are important debates to look at in this deal.  Also important will be the ongoing battle between cable television and online streaming services

They still must abide by the FCC Net Neutrality Agreement, which makes sure they treat all programs and traffic equally for their users, but it creates an interesting argument for the cable vs. online streaming debate.  Netflix, Hulu, and other streaming services have become larger and more popular through the years.  Seeing as they are dependent on the internet which Comcast provides to its subscribers there could be a conflict of interests at some point there.

At the end of the day it comes down to the age old story of Monopoly.  There were rules put in place during the railroad era to prevent a person or a company from having complete control over a market so that they would be unable to exploit it.  Does this merger of these two super companies match that definition?  Maybe, maybe not, but it’s still an interesting move in a changing market.  We know that TV subscriptions have been dwindling in the 21st century and that the move to online has changed the business dramatically.  This move could just be business but it could also be a chance for Comcast to swing into a defining role to change the cable market, and I’ll be watching closely to see where things go from here.

References:

Yu, R., and Hjemgaard, K. (2014, February 13). Comcast, Time Warner Cable Reach $45B deal. Retrieved from http://www.usatoday.com/story/money/business/2014/02/13/comcast-time-warner-cable-deal/5446613/

Davidson, P. (2014, February 13). Legal Experts: Cable TV deal likely to click. Retrieved from http://www.usatoday.com/story/money/business/2014/02/13/comcast-time-warner-cable-antitrust-issues/5455407/

Barrett, B. (2014, February 13). Why the comcast-time warner cable merger is worse than you think. Gizmodo. Retrieved from http://gizmodo.com/why-the-comcast-time-warner-cable-merger-is-even-worse-1522096469

Chmielewski, D. (2014, February 13). Comcast-Time Warner Cable deal may heighten calls for net neutrality. Retrieved from http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-comcast-merger-net-neutrality-20140213,0,5436655.story#axzz2tGgEKNfJ

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