Monday, July 28, 2014
Inquirer Daily News

Many questions raised about cable merger

So, is the proposed $45.2 million megamerger of Comcast Corp. and Time Warner Cable a good deal?

Depends on whose cable is being spliced.

Time Warner Cable subscribers (in New York, Southern California, Texas, and other regions) would certainly make out well. They would inherit Comcast's massive video-on-demand and movie libraries, and be eligible for far-faster broadband service than they now receive.

They also would get access to technological advances like Comcast's cloud-based entertainment operating system, X1.

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  • Paulson: Comcast-Time Warner 'a dream combination'
  • In Comcast markets such as Philadelphia, you would receive the rather nugatory services that Time Warner Cable offers: StartOver, which permits you to restart a live program in progress, and LookBack, which allows you to watch shows for up to three days after they air without a DVR. Big whoop.

    In a conference call Thursday, Comcast executive vice president David L. Cohen termed the merger "pro-consumer, pro-competitive, strongly in the public interest, and approvable."

    Those first two claims have been greeted with derision in some quarters.

    "This has the potential to be a very bad deal for consumers," said Delara Derakhshani, counsel for Consumers Union, the public policy division of Consumer Reports. "Under this proposed deal, two huge companies would become a behemoth. We're counting on regulators to take a very hard look at what this enormous merger would do to competition, customer service, and bills that continue to climb year after year."

    "I think this would be an absolute disaster," said Craig Aaron, president of Free Press, a national advocacy group for media and technology issues. "It's very dangerous to give this much power over what we watch, read, and download every day to a single company.

    "The one consumer benefit you never hear them talking about is anyone's bill going down," said Aaron. "That's simply not on the table."

    Other industry experts don't foresee such a volatile outcome.

    "Pricing will probably stay the same, but value will be greater," said Mike Farrell, senior financial editor for Multichannel News. "Whether you're paying $70 a month or $120, you're going to get more things. The merger is going to make it easier to roll out new products and services."

    Under the proposed deal, Comcast, which has 30 million cable-TV subscribers, would acquire Time Warner's 11 million. But it would voluntarily divest itself of three million of those subscribers to keep its share of the national cable market under 30 percent.

    The FCC once ruled that that was the maximum number of customers any one cable operator could have. That law was overturned in 2009, but Comcast is adhering to it in this deal.

    Of course, cable needs all the image enhancement it can get.

    Of the 43 industries tracked in the American Customer Satisfaction Index, subscription TV ranks 42d, below health care. Time Warner Cable was at the bottom of that category - just below Comcast.

    "They both rank particularly low in an index we call value for money," said David VanAmburg, the managing director of ACSI. "Consumers feel they're paying pretty high prices relative to the quality of the service they receive."

    And here's one last opinion on the merger.

    "It's all about leverage," says Brad Adgate, senior vice president of research at Horizon Media. "And this levels the playing field. Look at Discovery and Disney. They have 15 or so cable channels they can bundle together and force these multichannel video distributors [like Comcast] to pay higher subscription fees."

    The idea is that a bigger Comcast will drive a harder bargain with content providers and pass those savings on to its customers. So let the big dog eat.

     


    dhiltbrand@phillynews.com

    215-854-4875 @daveondemand_tv

    David Hiltbrand INQUIRER TV CRITIC
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