B&E This Month

Comcast + Time Warner = ?

In an industry headed for consolidation, a merger seems the most natural outcome. Acceptable? Not if it’s the largest and second-largest players involved in the deal! On February 13, 2014, Comcast announced its intent to acquire Time Warner Cable in a deal valued at a little over $45 billion. Experts claim that the merger does not reduce competition in any way since the two entities function in independent markets. That precisely is the concern. The tie-up of the two cable providers will create a giant with 30 million customers – accounting for 30%  of the US TV market and 38% of America’s high-speed Internet customers. The potential clout that would result from this deal is why the FCC could disallow the merger to occur. It has the potential to kill innovation. The combined entity would not only own the infrastructure, but also NBC Universal, giving providers like NBC, CNBC, MSNBC, USA Network, The Weather Channel and many more the unwanted upper hand over rival providers. For the two cable operators, if it goes through, the deal will mean a windfall of control in the American cable TV and Internet market. For customers, there is little to gain. A price hike though, may become reality.