Coverage: Comcast-Time Warner merger collapses

As Comcast and Time Warner Cable call off the combination, many in the media are debating whether it is going to be a good or bad thing for consumers. Some were looking forward to improved service, while others are concerned about the lack of competition.

Hilary Stout wrote for The New York Times that some Time Warner customers were looking forward to better service after the merger:

In the vast realm of unhappy cable customers, Time Warner Cable subscribers stand out as an especially miserable bunch.

The company, which has near monopolies in some of the country’s largest markets, including parts of New York City, scores dead last on consumer satisfaction surveys, not only for cable but for all industries.

Now, with Time Warner Cable back in play after Comcast abandoned its $45 billion takeover last week, many of the company’s more than 15 million subscribers are resigned to frustration, stuck for now with the company they love to hate and wondering if any future deal could be any better.

It is an apprehensive time for cable customers in general. Despite regulators’ objections to the huge Comcast deal, analysts say they expect continued consolidation in an industry where single carriers already dominate most regions.

No sooner had the door shut on the Comcast deal last Thursday than reports emerged that Charter Communications, the regional cable operator controlled by the billionaire John C. Malone, was exploring a new bid for Time Warner Cable, its second in less than two years.

But The San Francisco Chronicle editorial countered that the deal falling apart was actually good for consumers:

The Comcast-Time Warner merger, worth $45.2 billion, finally fell apart last week. That’s bad news for Comcast and Time Warner, but it’s good news for consumers.

Comcast and Time Warner are the country’s two largest cable and Internet providers. The idea of a combined mega-company caught the attention of both the Justice Department and the Federal Communications Commission. When FCC staffers recommended that the merger be reviewed by an administrative law judge — a clear signal that the regulators would challenge the deal — Comcast called it off.

The government’s legitimate concern was that a merger would concentrate too much of the broadband Internet market in too few hands, and that one massive company would have too much leverage against TV channel owners and new online entrants. A combined Comcast/Time Warner would control around 57 percent of the broadband market (32 million Internet subscribers) and more than 30 percent of the pay-TV market (more than 30 million customers).

In some markets — including the Bay Area — there’s little to no competition for broadband and cable service already. And if you don’t believe that monopolies have problems with service and efficiency, just ask a local how they feel about their provider. Comcast even admits that it’s not the best company when it comes to these very basic services.

CNET’s Marguerite Reardon wrote that the net neutrality debate hurt the chances of the deal going through:

Call it bad timing for Comcast. But the heated public debate over Net neutrality likely played a major role in sinking the cable giant’s hopes to buy Time Warner Cable.

“It was subtle, but Net neutrality framed the debate,” said Christopher Sprigman, a law professor at New York University. “Through that process, it became clear that the state of broadband for the average consumer is pretty bad. And regulators didn’t want to make an already bad situation worse by giving one of the largest broadband providers more power.”

More than a year after it announced plans to buy Time Warner Cable for $45.2 billion, Comcast on Friday pulled the plug on its mega-merger, citing opposition from regulators. A merger between the two companies would have created a pay-television giant with about 30 million subscribers. But more importantly to regulators, it would have created a company that controlled between 40 percent and 57 percent of the public’s access to broadband Internet, depending on how broadband is defined.

When the deal was first announced, it was seen by many as a sure thing. Comcast had faced little opposition in 2011 to buy a controlling stake in NBC Universal. The company’s head lobbyist, David Cohen, who was marshalling the Time Warner Cable deal through the regulatory approval process, had achieved rock star status inside the Beltway.

Klint Finley concurred in a story for Wired that public pressure on Internet policy likely attributed to the deal falling apart:

Some claim the move is a victory for the Obama Administration, which has long promised to crack down on antitrust violations and mega-mergers. But in 2011, the FCC and the DOJ approved the merger of Comcast and NBC Universal, another coming together of two massive media companies that raised serious questions about conflicts of interest.

Does that mean federal regulators have toughened up since then? Maybe, maybe not. But one thing is for certain: the rest of us have. The world is paying attention to internet policy in a way that it never has before. And with that attention comes pressure that will force the government’s hand on everything from network neutrality to antitrust as the internet becomes increasingly central to the lives of everyone.

One of the most obvious changes to the political landscape since the Comcast-NBC deal is the appointment of former telco lobbyist Tom Wheeler as FCC chairman in 2013.

Wheeler has brought a very different perspective to the FCC, says Randolph May, president of the Free State Foundation, a think tank that has generally been skeptical of government regulation.

No matter who’s to blame for the collapse, public opinion has definitely played a role in this deal falling apart. Consumers looking for better service aren’t likely to get it anytime soon as the deal falls apart, but it could open the door for another merger or more competition.