Cable Deal: Comcast To Buy Time Warner
STEVE INSKEEP, HOST:
Comcast, the nation's largest cable system provider, is poised to become bigger. This morning, executives of the two companies said they have reached agreement for Comcast to acquire Time Warner Cable. That's the nation's second-largest cable provider. It's a no-cash, all stock exchange, valued at about $45 billion. NPR media correspondent David Folkenflik is covering this story. He's on the line. Hi, David.
DAVID FOLKENFLIK, BYLINE: Hey, Steve.
INSKEEP: So, what does this mean for the average person watching TV?
FOLKENFLIK: Well, you know, at first blush, not a lot. The way the cable provider industry works, you know, there's not a lot of competition in any one town for most of the time. There's not a lot of overlap between the systems of Time Warner Cable and Comcast. So, you're not thinking, oh, gosh, this is going to jack up my rates right away. On the other hand, there's some consumer advocates who are already crying foul. And there is the question of, gosh, if there are fewer players to compete for the contracts that are given out by local and regional governments to cable providers, then is that ultimately going to lead to more beneficial terms for a place like Comcast and higher rates for the consumer?
INSKEEP: So, you have this company, Comcast. It's already very large. It's very powerful. It's like a monopoly in some parts of the country. Why would they want to then buy Time Warner?
FOLKENFLIK: Well, you've got to look at this as the second shoe dropping, in some senses. Not so very long ago, Comcast bought NBCUniversal, which includes the network that we're all so familiar with, but they really acquired it to get all of those cable channels that are part of the NBCUniversal family, you know, Bravo and CNBC and SyFy and others.
And what they're essentially looking to do is to have both the content creators and the channels that have all these shows, and then the systems on which they're viewed by all those consumers. And they're looking to lock up more of the market, both in terms of the content side and the provision side. And they were also looking to head off a challenge from a smaller cable company called Charter that was being backed by the media mogul John Malone in an effort to buy Time Warner. So, this is an effort for them to stave off a challenge, and also to lock down both the cable system business and more, for that matter, of the growing broadband business.
INSKEEP: Meaning that even if they don't own the programming, they are going to be the people who are distributing even more of it, which will give them even more power when deciding who gets how much money.
FOLKENFLIK: That's right. I mean, there's a very hard-fought battle between the cable providers and the content creators on that very issue: How much do you pay per subscriber, per channel?
INSKEEP: OK. So, are antitrust regulators and other people going to allow this deal to happen?
FOLKENFLIK: Well, you know, there are two sets of concerns for a deal like this. There's the question of the Federal Communications Commission, which can look at this anytime you have broadcasters involved. It's not immediately apparent that the FCC is going to weigh in with concerns on that. You would have thought that they would have put a lot higher bar to Comcast acquiring NBCUniversal, if that had been the case.
In this case, I think you've got the question of antitrust, a concentration of so much of the nation's cable provider industry, and for that matter, broadband Internet in one company, with Comcast having a high interest in both. And that's really located at the Justice Department. I think lawyers there are going to take a tough look. And, in fact, Comcast is signaling that it will divest itself of about three million subscribers of Time Warner as a way kind of appeasing those concerns.
INSKEEP: So, could this concentration of power affect at all what we actually see?
FOLKENFLIK: Well, I think they're going to be able to dictate, at Comcast, to a greater degree than before, the certain kinds of programming, you can see this. I mean, there's been a fight in the satellite world over the Weather Channel - DirecTV ultimately dropping the channel for now, much to the consternation of some of it subscribers - because it hasn't liked the programming direction the Weather Channel has gone in. You know, Comcast - with a much bigger subscriber base than DirecTV - might be able to dictate terms like that, to some degree, with some of the channels with which it does business.
INSKEEP: David, thanks very much.
FOLKENFLIK: You bet.
INSKEEP: That's NPR's David Folkenflik.