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.