Consolidation Station: Next Stop - Comcast & Time Warner Merger

by Jordan Reth, Policy Fellow

The proposed deal between Comcast and Time Warner Cable is the latest in a wave of major media mergers drawing public concern and scrutiny from the feds. Deals like AT&T’s reported acquisition of Direct TV for $50 billion and Facebook’s purchase of WhatsApp for $19 billion, along with last year’s Maker Studios buyout by Disney—also near the billion dollar mark—are part of a larger trend of corporate consolidation. The Comcast Time Warner deal itself could be upwards of $45 billionbut is not the biggest deal Time Warner has been a part of. The Time Warner/AOL Online deal in 2000 was the largest merger by value ever announced, coming in at over $186 billion.

Beyond the staggering dollar figures are very real antitrust and public policy concerns. Let’s look at what it means for creators and fans when just a few companies control so much of the media, technology and entertainment universe. 

These deals may seem abstract or beyond the imagining of the everyday artist. But most creators rely on the Internet and broadcast platforms to reach audiences and ultimately earn a living. This is something that regulators need to consider. For its part, the government examines whether a proposed merger would negatively impact consumers or frustrate competion. With the Comcast/Time Warner deal, the Department of Justice (DOJ) and the Federal Communications Commission (FCC) are each tasked with review. The DOJ examines the impact on competition and the FCC determines whether the merger satisfies the public interest.

In attempt to meet regulatory muster, Comcast has lately touted a number of supposed public benefits to the merger. The company has kicked off massive advertising campaign claiming that the two companies would be “better together.” Many remain skeptical, given Comcast’s repeated failure to live up to its past promises of public service. For example, Comcast recently announced an expansion to its Internet Essentials program, designed to promote internet access for low-income Americans. Generally intrepreted as an “offering” to the FCC from a pervious merger—the $31 billion purchase of NBC/Universal—the Internet Essentials program has not been without controversy. Critics claim the program is hard to sign up for, with access limited in some cases to only new customers or limited to those without outstanding bills.

Comcast argues that it does not compete with Time Warner in the same markets and that the merger will not create competition concerns. During a May Senate Judiciary Committee Hearing, Comcast Executive Vice President David Cohen assured Congress that the deal could slow price increases and that the public would be the “big winners.” Time Warner Cable Executive Vice President and CEO Arthur Minson stated that consumers would benefit from “next generation video, broadband, and voice services” with faster service under the deal. 

But critics of the merger argued that consumers will lose out in pricing and access. Former DOJ Antitrust Chief Counsel and current Public Knowledge President and CEO Gene Kimmelman argued that the transaction could undermine new and innovative options (e.g. online video streaming services, alternative set top boxes) that benefit consumers, while locking in high prices for certain programs and devaluing others. Kimmelman further argued that the concentration of power would effectively make Comcast a “gatekeeper” of the Internet—that’s bad news for musicians and other media-makers concerned about unfettered access to potential audiences.

Diversity is another major concern about the Comcast-Time Warner merger. Colorlines reports that while women represent over half of the population and people of color represent about 36 percentage of population, both groups each own less than 10 percent of radio and TV licenses. Further consolidation in media will hinder access to ownership for women and minorities, directly impacting diversity in programming.

Here at FMC, we have a tough time believing that most mega-mergers will ever be good for the music community, whether it’s recorded music, radio, ticketing, or telecommunications

There’s still time to make your voice heard. You can check here for information concerning the transaction and check here for how to file your own comments.

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