With Proposed Mega-Merger On The Hill, Spotlight's On Consumers
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Will cable and Internet customers get shafted by the proposed merger of Comcast and Time Warner Cable? That question was up for discussion on Capitol Hill today, as the companies tried to persuade skeptics on the Senate Judiciary Committee that their $45 billion merger would benefit U.S. consumers. The deal, which would cement Comcast's position as the nation's biggest cable company, has to be approved by federal regulators. Some lawmakers are worried that the merger will give Comcast too much power over programming decisions and lead to higher cable and Internet bills. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Today's hearing had to be moved into a larger room in the Hart Senate Office Building to accommodate the army of activists and lobbyists who wanted to attend. It was a testament to the vast interest the merger has generated. The combined company would control 30 percent of the nation's cable TV market and nearly 40 percent of its broadband market. Democratic Senator Amy Klobuchar of Minnesota.
Its size and scope would give it the power to affect prices, service and content offerings throughout the industry and the future of online video competition.
Among those testifying was Jamie Bosworth, who runs a new cable channel dedicated to golf. Bosworth said he's competing against another channel owned by Comcast and he's had trouble getting carriage on cable systems in major markets. He said that means advertisers won't buy time on his channel.
JAMIE BOSWORTH: We are up against a distribution system that stifles innovation and consumer choice. It's dominated by a few large players. We are concerned that this merger may make a bad situation even worse.
ZARROLI: If the deal goes through, warned consumer activist Gene Kimmelman, Comcast will have a virtual gatekeeper role for new Internet video services. But Comcast's executive vice president, David Cohen, brushed aside many of the concerns raised at the hearing. For one thing, Cohen challenged the idea that the deal would lessen competition in the cable market.
DAVID COHEN: Objectively, this is not a challenging transaction from an anti-trust perspective. Our company serves separate and distinct geographic areas. We don't compete for customers anywhere.
ZARROLI: Cohen also suggested that a lot of the skepticism about the deal is based on misperceptions about what's happening in the business. More and more viewers are moving away from cable to new forms of video and broadband entertainment such as Netflix. And he said many of these new technologies are being driven by giant media and Internet companies such as Sony and Google that are even bigger and richer than Comcast.
COHEN: In fact, the business reason for this transaction is to create a scale that will enable Comcast to invest more in innovation and infrastructure and enhance our ability to compete more effectively.
ZARROLI: It was a view echoed by Christopher Yoo, a professor at the University of Pennsylvania Law School. He noted that there have been big mergers in the past that were believed at the time to concentrate too much power in the hands of a single company. He cited the notorious deal between AOL and Time Warner in 2000. But the mergers were soon outpaced by rapid technological change.
COHEN: We're at a moment where things are going to change whether the companies like it or not, and we need to allow them to respond to those changes in the environment.
ZARROLI: Federal regulators will have to weigh those factors when they decide whether the deal is in the public interest. But several senators said they have been flooded with emails and phone calls from constituents who remain unconvinced about the merits of the merger. Jim Zarroli, NPR News.