Have you heard that Comcast has reached an agreement to purchase Time Warner cable for $45 billion? These are already the two largest cable television providers in the nation and the merger will make Comcast an absolute giant. Is that a good thing or a bad thing?
I’m going to go out on a limb and say that consumers stand to lose a lot if this deal goes through. Let’s face it, when one company has such an enormous amount of power and leverage it usually means the average Joe is going to get screwed.
We should mention that the merger is not official and it will have to be approved by regulators before it can be completed. If the deal is approved Comcast will operate in 43 of the 50 largest metropolitan markets and will have about a third of all national pay television subscribers and broadband Internet users under their control.
The cable television market is already a joke. Each of the large companies operates its own little area like a fiefdom, and there is no real competition as users are forced to either subscribe to the one and only service in there are or go outside the box with a service like DirectTV or Verizon FIOS (I’m a happy FIOS user myself).
With a third of all paid subscribers under their umbrella, Comcast will be more of an empire than a fiefdom. With all that power and even less competition to worry about, how long before they jack up prices more and more? When one company has nearly complete control over the market they are free to dictate terms all they want. They can raise prices and reduce services on a whim and customers have no option but to accept it or go without the service altogether.
The merger would also give Comcast more leverage in their negotiations with businesses like Netflix and Amazon. Cable companies have argued that companies providing streaming content should pay extra fees for moving large amounts of data. This would be in addition to the standard monthly fees users already pay for Internet access. Of course, if content companies are forced to pay added fees, they’ll just pass that expense on to their customers. Once again, the consumer gets screwed.
What do you think about the possible merger between Comcast and Time Warner?