Comcast's biggest reason it's citing to approve its $45.2 billion takeover of Time Warner Cable (TWC) is that the two companies don't compete against each other.
As David Cohen, Executive Vice President of Comcast, said during the recent Senate Judiciary Committee hearing:
South Carolina is one of the states where Time Warner Cable and Comcast both have a presence. It is a state that actually demonstrates the lack of competitive overlap between the two.
In other words, their argument is that there can't be less
competition because there currently is no
I hate to ask the obvious question but: As the two biggest cable providers, shouldn't you have been competing against each other?
Al Franken brought up the best point of the Senate Judiciary hearing that in 2010, when Comcast wanted to merge with NBCUniversal, they cited Time-Warner Cable as a specific competitor who could prevent Comcast from setting anti-competitive prices.
Comcast can't have it both ways. It can't say that the existence of competition among distributors including Time Warner Cable was a reason to approve the NBC deal in 2010 and then turn around a few years later and say that the absence of competition with Time Warner Cable is a reason to approve this deal.
What I'm hearing though is that not only do they want it both ways, but that they've had it both ways even as separate companies.
Or, as Senator Lindsey Graham said in what he thought was a softball question to support Time Warner's argument:
Graham: “So, generally speaking, cable companies don’t compete with each other, is that what we’re saying?”
Cohen: "That is correct."
Wait ... isn't this a problem? Is there any way we can go after Comcast and TWC for not competing?
Instead of allowing these companies to merge (because they already don't compete), shouldn't we be working to establish more competition for consumers?
And yes, I understand that there are other technologies such as DirecTV (which Lindsay Graham admits gets bad reception during storms) and online streaming companies (like Netflix, which Comcast already strong-armed into paying twice), but these are different services. Cable is seen as the premier television service. And in the broadband market, there is no competition.
Comcast is admitting that they're a regional monopoly and we're going to give them a broader monopoly?
The hubris is simply stunning.
The only way Comcast could be more (dis)honest is if they admitted that they had already purchased the results of the Congressional hearings.
Oh wait ... David Cohen did say the following to Lindsey Graham during testimony:
“I should just let you take the witness seat, because that’s exactly what I’ve been saying.”
Hi, I'm Lindsay Graham for Comcast.
Is this a hearing about what's best for the people of our country or what's best for Comcast?
Maybe this is why Comcast recently beat out such stellar corporations as Monsanto, Walmart, and SeaWorld to win the Golden Poo award as worst company in America. Ousted in the quarterfinals was Time Warner Cable (TWC).
No wonder people are so frustrated with Congress.
A few statistics on television markets
Just the television portion (excluding Internet or phone service) of the cable bill has nearly doubled to $86 over the past 10 years. A cable and Internet package is roughly $125-150 (though they often offer a low introductory price to get you in the door).
U.S. consumers in major cities pay higher prices for slower speeds compared to consumers abroad.
Television dwarfs online video advertising by a factor of 20 to 1.
4 carriers dominate the television landscape: Time Warner, Comcast, DirecTV and DISH network.
Channels are bundled so that you pay for them even if you don't watch them. Example: ESPN at $5.54 a month.
Only four cable and satellite providers reach more than 10 million subscribers:
Comcast (22 million), DirecTV (20 million); DISH Network (14 million); and Time Warner
Cable (11 million)
Broadcasting and Content
Comcast owns or partially owns:
- Eleven regional sports networks
- Universal Pictures
- USA Networks
- Golf Channel
- 26 broadcast stations
- Time Warner Cable SportsNet
- Time Warner Cable Deportes
- SportsNet LA
- 26 local news channels
- 16 local sports channels
- Turner Broadcasting
- Warner Brothers studios
- The WB and Kids WB
- Cartoon Network
- Adult Swim
- New Line Cinema
In other words, Comcast/Time Warner would own a majority of channels on TV in addition to the means to deliver these channels. They also would be a major force in content development. A strong incentive would exist to deny competitors access to bandwidth in favor of Comcast/Time Warner channels and content.
As Al Franken mentioned, Comcast was allowed to purchase NBCUniversal in 2010 only because they cited Time Warner as a competitor who owned competing content developers and channels.
Statistics on Broadband
The U.S. is 17th among developed nations in broadband capabilities and 2nd among developed nations in cost.
As Richard J. Sherwin, CEO of Spot On Networks LLC (testimony that you won't see on network television), said:
"When a service provider controls an area, with little or no competition, the service provider is incentivized to extract maximum profit for minimum investment to satisfy its shareholders with little regard for innovation or improvement."
The following map from the WSJ (full map here
) shows exactly how Comcast and TWC don't compete in the broadband market either.
Yet instead of creating conditions where these companies would compete with each other, we're considering a merger to solidify the monopoly.
The need for good government
Every liberal should be talking about this because I can't think of a better case for good government.
1. Two companies want to create a monopoly to increase their leverage over consumers and other, smaller businesses. No one outside of Comcast and TWC benefits.
2. Comcast develops talking points: "Well, we're already not competing so how could it be worse?"
3. The media mindlessly repeats these talking points. I swear I heard someone on NPR the other day saying "They really don't compete now so this isn't going to change things." Ummm ... they really don't compete now? Did you really just say that? Isn't that a problem?
4. Congress repeats the talking points (Did I mention Comcast is a major donor?).
5. No one asks any real people what they think. All the testimony before the judiciary committee was CEOs, lobbyists, and industry insiders. Not all of it was for the deal, but where are the people?
6. An FCC headed by former industry lobbyist Tom Wheeler is in charge of approving the deal.
7. The Tea Party uses this as yet another instance of why we need to get rid of government.
Getting rid of government won't stop Comcast from becoming a monopoly. The problem, however, is that the government we have doesn't seem to be doing enough either.
What we need is good government. What we need is a government that considers consumers as well as the needs of our largest businesses.
We should be using the Comcast merger to talk about these principles and make the case for good government.
This would do more for the Democratic Party than any money they could possibly receive from Comcast.
I think these officials need to hear from some actual people
They seem to be in such a bubble that they're saying things like "cable companies don't compete with each other" as if it's a good thing.
I wrote to Al Franken, Lindsay Graham, FCC chairman Tom Wheeler, and my own Congressmen and told them about my experiences with our current regional monopoly Time Warner.
The answer is not to create a bigger monopoly with Comcast, but to introduce more competition into the currently existing regional monopolies. At the very least, why aren't they competing with each other?
We should be asking questions like: Why do we have such poor service at such high cost? Why do we compare so poorly with other countries?
Democrats (majority party) on the Senate Judiciary Committee
Republicans (minority party) on the Senate Judiciary Committee
Ask them to talk to some real people in Comcast or TWC markets. Tell them you can't think of a clearer case for good government than preventing this merger.
And while you're at it, ask them to look into the issues with the existing regional monopolies.