February 15, 2014 by David K. Sutton
Mergers Like Comcast-Time Warner Are NEVER Good For Customers
When one massive corporation merges with another massive corporation, the result is never good for customers. The spinmeisters can say what they will, but these mergers are not done to benefit customers, instead they are done to service greed. This is the capitalist formula: Grow, and grow some more, and then when it seems there’s no more growth potential, do whatever you can to grow yet again. And for many very large companies, it is the merger that has allowed them to continue to appease those shareholders. Comcast CEO Brian Roberts calls this a “pro-consumer” merger. “The combination of Time Warner Cable and Comcast creates an exciting opportunity for our company, for our customers and for our shareholders,” said Roberts in a media conference call. But that is a lie, as mergers like Comcast-Time Warner do not lead to lower prices and higher competition, they lead to the exact opposite, and that is hardly “exciting” for customers. But he is right about one thing, this is exactly what the shareholders want. These mergers are not about doing right by the customer, they are about doing right by the shareholders, and that includes top executive compensation.
The Real Problem with the Comcast-Time Warner Merger — Among household expenses, few things have risen quite as quickly as the cable bill. As recently as the nineteen-nineties, cable prices ranged from seven dollars to eleven dollars and fifty cents per month. After years of price hikes, a decent cable package is now over sixty dollars a month; the average cost is eighty-six dollars. Comcast, in 2013, collected about a hundred and fifty-six dollars a month on average, per customer—and some people are paying much more than that. Outpacing inflation, cable is now so expensive that it creates poverty issues: in poorer households it competes with basics like food, rent, or health insurance. If you wanted to help the poor, you could do worse than cutting cable bills.
Okay, some people will push back on this and say cable television is not a necessity, so if you can’t afford it, then don’t buy it. But remember, historically the government has viewed television as a public service, and for many rural areas, cable television is the only practical way to get local news because reception is spotty or nonexistent over antenna. Add to this equation internet access, which the government also views as a vital public service, and suddenly you realize even households living in poverty need to have access to at least a basic package from their local cable company. So having less competition, in a market already lacking adequate competition is definitely not in the public good, and that is why government (i.e. “the Federal Communications Commission”) should not allow the Comcast-Time Warner merger to continue. But there’s also another reason beyond rising cable bills, it’s also about control of information.
At a time when fewer and fewer corporations control the flow of information and news, Comcast on Thursday agreed to buy Time Warner Cable. The merger with Time Warner would create the largest cable company in America. If the deal is approved by regulators, one corporation would provide cable service for about one in three American households. It’s clear that customers want more choices and increased competition in the cable television and Internet industry. – Bernie Sanders, Vermont Senator (I)
This is not a trivial matter, it’s vital in a healthy democracy to have free information exchange, and when too few companies control all the media outlets, they are able to set the tone and control the dialog. It need not be overt, but instead subversive, with effects not being felt immediately, but over time. But when so few corporate executives are pushing all the buttons, it is not only bad for customers, it is also bad for citizens. Can anyone say we are empowered as consumers and citizens by this merger?
The Real Problem with the Comcast-Time Warner Merger — [T]he Federal Communications Commission, by law, is only supposed to approve the merger if it finds that it serves “the public interest.” Given recent history, and in today’s cable business, the public’s interest can be captured in two words: “lower prices.” The F.C.C., in fact, is supposed to ensure that cable prices are “reasonable.” Here’s a simple rule of thumb: unless the F.C.C. thinks that there is a realistic chance that the deal will reverse two decades of rising prices, it should stop the merger.