Why the Charter–Time Warner Cable Merger is a Bad Deal (Guest Column)

Time Warner Cable Charter Communications
Courtesy of Time Warner Cable Charter Communications

In April 2015, after a 14-month review process, Comcast dropped its bid to acquire Time Warner Cable, having learned that the Department of Justice and FCC were preparing to block the merger. FCC Chairman Tom Wheeler explained that “the proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services.” It was a major victory for content creators and consumers alike.

But the victory was soon put in jeopardy. Only a month later, Charter Communications, a small cable operator and broadband provider, announced its intention to acquire Time Warner Cable and Bright House Networks, making it the nation’s second-largest residential broadband company. This latest attempt at consolidation is still a bad deal.

Had the Comcast-Time Warner Cable merger had been approved, one company would have controlled more than half of the nation’s high-speed broadband market. If this latest merger is approved, two companies—Comcast and the new Charter entity—will control close to 90% of that market. This is a problem because these two companies will have both motive and opportunity to coordinate actions to stifle online video competition that threatens their traditional cable business.

Companies like Charter, Time Warner Cable and Comcast have controlled video distribution for decades, deciding what networks were available to consumers. But the Internet has put consumers in charge and the results are compelling.

Subscriptions to Netflix, Amazon and Hulu are all surging. Original programming for the Internet is booming. In 2015, 37 WGA-covered television-length series were released online. Traditional television networks are even bypassing the cable companies, with HBO, Showtime and Starz offering consumers direct access to their programming through an online subscription. Satellite provider Dish Network has joined in, offering customers more flexible, Internet-delivered TV network bundles. All of this means more content, more competition and more consumer control, none of which cable operators like.

That’s why the Writers Guild of America, West is part of the Stop Mega Cable Coalition, which includes more than a dozen organizations that represent consumers, online video providers and broadband providers and are opposed to this merger.

If this merger is not stopped we can expect a future that looks very much like the past, with the same cable gatekeepers controlling Internet-delivered video. Companies like Charter and Comcast can use the pricing of Internet service and proprietary set-top boxes to determine which online content is accessible and at what price to their customers; they can add data caps to make online video more expensive; or they can pick which video services can be watched through the company’s set-top box.

This future is not only possible, it is probable: two-thirds of households in the merged company’s footprint will have no other choice for broadband at speeds of 25 Mbps or greater, leaving the company free to implement practices that make online video less attractive, knowing that most consumers have no alternative. In Los Angeles County, the merged company will reach 98% of County residents and 70% of those residents will have no alternative for high-speed broadband.

We are once again faced with a merger that threatens competition and innovation. WGAW is not the only industry organization to hold this belief. Both Dish and HBO have expressed their concern about this merger’s effect on the online video market. To protect the new opportunities for talent and the breadth and depth of content the Internet now offers consumers, this merger must be stopped.

David Young is the executive director and Ellen Stutzman is the senior director, research and public policy, Writers Guild of America, West.

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  1. Jonny B says:

    “This future is not only possible, it is probable: two-thirds of households in the merged company’s footprint will have no other choice for broadband at speeds of 25 Mbps or greater, leaving the company free to implement practices that make online video less attractive, knowing that most consumers have no alternative. In Los Angeles County, the merged company will reach 98% of County residents and 70% of those residents will have no alternative for high-speed broadband.”

    They allready only have one choice. Charter and Time Warner, just like Comcast and Time Warner, do not offer service simultaneously in the same geographical areas. So the choice of one provider stays the same, just those who now have time warner will get charter. The logic in this argument is weak.

    Local governments are often the ones stifling competition in broadband. Downtown Buffalo NY didn’t allow Verizon to run Fios there. So you get crap DSL, Timewarner, or super expensive Fiber from Level 3 and the like.

  2. Stop the fear mongering says:

    Nothing but fear mongering people with this. I’m sorry to tell you that the merger of these two companies is by far a better alternative than keeping a dying cable company like Time Warner Cable going, they have not invested in their own infrastructure for years, where Charter has. Charters lowest speed of internet is at 60 Mbps, where TWC’s highest is at 50 Mbps. That little tid bit of information is enough for me being in a TWC market to want charter here and now.
    I’m also sorry to say but the cable companies will not control the Internet, AT&T does support some decent speeds as well as Verizon up to 100 Mbps in some areas, so even if the companies would merge they would not control a customers use of the Internet, customers would still have a choice on who to use for their Internet.
    Oh and I almost forgot but if the companies wanted to put data caps on you they would have already, but AT&T already does (they just don’t enforce it)!

  3. Comcast now seems to be expanding in the content arena. Won’t be long until they purchase Netflix. They will get their pound of flesh any way they can. Just suck it up America.

  4. The reason this deal isn’t the same as AT&T and DirecTV is broadband. DirecTV has no comparable broadband offering. Since online video is the biggest emerging competitor to traditional cable, allowing mergers like this stifles that competition. BTW, we opposed the AT&T deal as well. We need more competition, not less.

  5. B says:

    If at&t can merge with DirecTV then Charter can merger with TWC and Brighthouse. Even after the merger Charter would still be smaller than Comcast and At&t/DirecTv. So if the logic is that Charter would be too big, then the at&t deal should be not have been allowed and Comcast should be broken up. If denied Charter would take it to court and Charter would win.

    At&t/DirecTV 26 million customers
    Comcast 22.4 million customers
    Charter/TWC/BH 18.4 million customers

    Why are Comcast and at&t/DirecTv allowed to exist but Charter can’t merge with TWC and BH?

  6. S says:

    Here We go Again with paid Bad Publicity..
    How come None of this comments were made when Huge AT&T was buying Direct TV..which they are not only big on the US but they are Internationally Big Companies..

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