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Proposed Comcast-Time Warner Cable deal raises serious concerns

Mega-merger could cause telecom costs to climb

Published: April 2014

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Bigger isn’t always better. At least that’s what consumers, public-interest groups, and some lawmakers are saying at the prospect of the nation’s two biggest cable companies becoming one.

In early February, Comcast announced a proposed $45 billion takeover of Time Warner Cable. Comcast is already the largest cable and broadband company, while Time Warner is the number two cable company and third biggest broadband provider. Combining the two companies would give Comcast access to about 30 million cable subscribers—or more than two-thirds of the market—and control over nearly 40 percent of broadband customers.

Naturally, when any one company stands to get that big, it raises a lot of questions. And when it’s taking place in a market where many consumers already have limited choices, Consumers Union, the policy and advocacy arm of Consumer Reports, has some serious concerns.

While the proposed deal was announced in February, Comcast filed its formal paperwork with the Federal Communications Commission in support of its merger with Time Warner Cable on April 8.

In its filing, Comcast billed the merger as a boost for consumers, allowing the cable giant to offer faster service and cutting-edge technologies while Comcast “tries” to keep up with growing competitors. But a closer look at Comcast’s claims, makes it clear that the market is already suffering from too little real competition and the merger will just make things worse. A Comcast executive has even acknowledged that the company can’t promise that customer bills "are going to go down or even that they're going to increase less rapidly.”

Consumers are already down on Comcast and Time Warner. Both companies earned low customer satisfaction scores in the latest Consumer Reports survey of consumers about telecom services. In particular, Comcast and Time Warner received poor scores for value for the money and low marks for customer support. There's little reason to believe that combining the two companies would improve either of these areas.

Though worrisome enough on its own, our concern goes further than Comcast’s growing market share as a cable and broadband provider. Comcast is a major content producer and owns a large amount of programming as a result of its previous merger with NBC Universal. Add all of this together and you would have a company with the ability to control the speed, quality, and type of programming for an unprecedented number of consumers.

Consumers Union has been opposed to the merger since it was first announced and we’re not alone. We recently joined with other groups that have gathered petitions with 400,000 signatures urging the federal government to reject the deal. The petitions will be delivered to the Federal Communications Commission and the Department of Justice, which are charged with reviewing the merger.

These petitions come on the heels of a letter from Consumers Union and more than 50 other public interest groups urging the FCC and Justice Department to block the deal.

Lawmakers on Capitol Hill are also weighing in on the issue. Senators had plenty of pointed questions for Comcast and Time Warner Cable executives at an April 9 hearing on their proposed mega-merger. Senators on both sides of the aisle voiced their concerns.

A combined Comcast/Time Warner has implications for millions of consumers across the country, so it’s no wonder that we’ve seen a huge response from consumers. We’re committed to ensuring that consumers are heard. The review of this merger has just begun, so there’s still time to voice your opinion. If you agree that this merger is a bad deal for consumers, we hope you’ll sign our petition.

This feature is part of a regular series by Consumers Union, the policy and advocacy arm of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.


Read other installments of our Policy & Action feature.


   

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