Joining the chorus of critics railing against the tide of Big Media mergers, the New York Times published an editorial Tuesday opposing Comcast’s planned acquisition of Time Warner Cable, concluding that the $45 billion deal will “concentrate too much power in the hands of one company” and leave consumers with limited choices.
The stakes involved in the merger of the nation’s two largest cable operators have only escalated with the announcement last week that AT&T plans to merge with DirecTV. That proposed $67.1 billion transaction was also met with opposition from consumer groups and misgivings expressed from broadcasters.
Nevertheless, some analysts suggested that the planned union of AT&T and DirecTV may have boosted the prospects that regulators will approve the Comcast and TW Cable merger, as another pay-TV operator would be in the marketplace with sufficient scale.
The New York Times argued that the Comcast-TW Cable transaction was giving one company too much influence over the marketplace, and dismissed Comcast’s contention that the deal would not reduce consumer choice because it does not compete with TWC anywhere.
“The reality is far different,” the New York Times editorial said. “At the end of 2012, according to the FCC, 64 percent of American homes had only one or at most two choices for Internet service that most people would consider broadband. Wireless services can handle streaming video, but many customers of Verizon or AT&T would blow through their monthly wireless data plan by streaming just one two-hour high-definition movie, at which point they would have to fork over extra fees.”
The Department of Justice and FCC are reviewing the merger. A Senate and House committee have already held hearings on the transaction, and are expected to also hold hearings on the proposed AT&T and DirecTV merger.
AT&T and DirecTV do face some overlap in their transaction, as pay-TV consumers in some markets have the option of subscribing to either AT&T’s U-verse or DirecTV’s satellite service. But analysts also expect approval of that merger, albeit likely with significant conditions imposed by regulators.
In a blog post last week, research firm MoffettNathanson wrote in a blog post that although they “more or less” concur that AT&T and DirecTV will gain regulatory approval, they say that regulators will face significant issues.
“The first is sheer size; as with Comcast-Time Warner Cable, size creates buying power, or in economics terms, monopsony risk,” they wrote. “The second is a loss of horizontal competition. The latter is likely the more serious issue.”