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How will regulators see the Comcast-Time Warner deal?

February 13, 2014 at 6:16 PM EDT
Comcast is making a bid to buy Time Warner for $45 billion. If approved, Comcast will extend its geographic reach and control nearly 30 percent of all paid cable subscribers in the United States. Gwen Ifill learns more about the motivation behind the deal and possible changes for consumers from Edmund Lee of Bloomberg News.
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GWEN IFILL: Comcast’s deal to buy Time Warner means the media giant, which already owns NBC Universal, is about to cast an even longer shadow over the industry. If the deal is approved, Comcast will have 30 million subscribers and control just under 30 percent of all paid cable subscribers in the country. It also becomes an even bigger player in the world of broadband Internet and video.

Geographically, Comcast grows as well. It will operate in 43 of the largest 50 markets, extend its heaviest concentration of subscribers north all the way to Maine, and gain access to markets in New York City, Los Angeles, and Dallas. But the $45 billion deal is being criticized by public interest groups worried about media consolidation.

We get more on all this from Edmund Lee of Bloomberg News.

Ed Lee, thanks for joining us.

I want to start by asking what is the immediate affect for consumers, subscribers to Comcast and to Time Warner of this kind of deal?

EDMUND LEE, Bloomberg News: Well, immediately, nothing is going to happen right away.

It will take at least a year for this deal to get closed, at the absolute earliest. So, consumers aren’t going to see any changes or differences in their current plans or their current prices. But about a year from now, you will start seeing a different name plate on your bills, certainly. And chances are your prices probably won’t change all that much, but that is what consumers — that is what consumers and consumer advocates are concerned about, not just the pricing, but, you know, the service.

Will it continue to be — will it improve, at least, or will it just be the same-old, same-old in terms of just, my cable is out, my Internet is out, and it’s taking a day or two for anyone to get to my house?

GWEN IFILL: When we think of media companies gobbling up other media companies, like Time Warner and AOL, say, we think to ourselves, this is going to result in reduced choice for consumers. Is there any — cable — the cable industry is different. So, is that likely here?

EDMUND LEE: Right. That’s a good point.

The cable companies — Time Warner Cable and Comcast, they don’t compete against each other. And Comcast CEO Brian Roberts said this morning on a press call, basically, we don’t even compete down to a certain zip code. They don’t even have — they are not in the same market.

So the way that regulators will probably want to view this — or at least one aspect is, will consumers see less choice as a result of this merger?  And the answer is no. If you are a Time Warner Cable customer, your choices haven’t changed as a result of this or if you are a Comcast customer. So in that way, it shouldn’t affect consumer choice, and so, therefore, there, it doesn’t hurt competition.

Of course, to begin with, however, as you pointed out just a second ago, the cable companies operate in these sort of mini-monopolies, that they have owned their regional markets for decades and they haven’t really faced competition, until the satellite and the telecommunications guys came along and started offering TV service.

So, that is where the competition is coming from, not between cable providers.

GWEN IFILL: Well, let’s talk about the satellite guys and the Internet broadband folks, who are now providing information. They are now providing entertainment and programming that goes directly into your computer or comes directly beamed from a satellite out in space.

Does this kind of consolidation make any competition that existed for them more difficult?

EDMUND LEE: You can make an argument that, you know, whether it’s DISH or DirecTV or AT&T or Verizon, these guys will have a harder time competing against Comcast, because Comcast is that much bigger.

So that is definitely something that regulators want to look at. And if you are a consumer, that is something you want to be concerned about, and at least make — be aware of in terms it of, will it be harder for me to — you know, to buy a different service because Comcast is that much bigger?

On the face of it, there isn’t any reason for that to be the case. The competition remains the same. But that is definitely an aspect. The other aspect, as you pointed out, is broadband service, Internet service. People can’t live without it. It’s becoming more crucial, more important than your video service, for that matter.

And so Comcast will become an even bigger — or own a bigger slice of the Internet broadband market. And that’s definitely something regulators and consumers will want to be aware of and make sure that they’re not going to get hurt by that.

I’m sure Comcast will want to agree to certain conditions in terms of making sure that they’re offering a high level of service at reasonable prices, because Internet has become as much a utility as the phone once was. And, you know, that’s going to be an important part for regulators to consider.

GWEN IFILL: You know, Edmund Lee, there has been a lot of conversation lately about cord-cutters, people who have decided to let go of cable.

EDMUND LEE: Right.

GWEN IFILL: They’re paying way too much, and they are just going to get their Netflix or they’re just going to get their Hulu or their Roku box, and that is the way they are going to get everything and they don’t have to worry about advertising. Is this a threat to companies like Comcast?  Is that why these kinds of mergers are happening?

EDMUND LEE: In fact, that’s one of the stated reasons why Comcast is looking to get bigger. They see the real competition as being Netflix or Hulu or Aereo, these smaller upstarts that are gaining steam, and speaking to consumers in a way that — consumers are changing their TV habits.

So, that is a big reason why those services are becoming popular. They are also cheaper. So Comcast is getting bigger because they want to be able to have the size, to have more money, to experiment more, to develop other technologies that hopefully will allow them to compete against whether it’s Netflix or Hulu or some other new company that could come down the pipe that we haven’t heard of yet.

But that’s also something that regulators and consumers would want to look at, which is, how will Comcast play with a Netflix or a Hulu, in the sense that their ability to deliver their streaming service through their broadband connection?  Because even if you want to cut your video service and you want to go for Netflix, you still have to get an Internet connection. And chances are, you will probably be getting it from Comcast.

If Comcast makes it more difficult — and this — this goes to the net neutrality debate that’s been happening in government and with FEC. That’s something that they are concerned about and looking at. If Comcast makes it harder for Netflix to deliver their service over their lines, that is going to be something that could cause concern and regulators want to look at.

GWEN IFILL: Let me ask you finally about — last time we heard a big acquisition story involving Comcast is when they bought — announced they were going to buy NBC Universal in 2009. It took two years for that deal to close because of regulatory scrutiny. Could we see the same thing happening in this case?

EDMUND LEE: I think, if anything, the smart money is that it will be a little easier this time than the last time. And the reason is, is that when they bought NBC, it’s a different — NBC is a programmer. And Comcast, they deal with other programmers, whether it’s CBS or Disney or FOX that — you know, to get those — the content on their systems.

They wanted to make sure that NBC wasn’t going to get favored against those other guys. In this case, it’s not the same dynamics. It’s not the same competitive situation. And so, in that way, it might be a little easier for Comcast to get this — get this done.

GWEN IFILL: It will be fascinating to watch. I know that is what are you are paid to do, Edmund Lee of Bloomberg News. Thanks so much.

EDMUND LEE: Right. Sure.