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Thu February 13, 2014
Consumer Advocates Alarmed By $45 Billion Deal
Originally published on Thu February 13, 2014 7:58 pm
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Comcast is already the nation's biggest cable TV and Internet service provider. And now, it's trying to get a whole lot bigger. The company struck a deal to buy its top cable rival, Time Warner Cable. The price tag, $45 billion. NPR's David Folkenflik reports that critics say if the sale is approved, Comcast will be too dominant.
DAVID FOLKENFLIK, BYLINE: Executives from the two companies first spoke about the news on CNBC, one of Comcast's many television properties. Brian Roberts is chairman and CEO of Comcast.
BRIAN ROBERTS: It's a really special transaction for both Time Warner Cable and for Comcast shareholders, our employees and mostly our customers.
FOLKENFLIK: Asked by CNBC's David Faber why it's good for customers, Roberts had a ready reply.
ROBERTS: The deal is pro-competitive. It's pro-consumer. We're going to be able to bring better products, faster Internet, more channels, on demand...
FOLKENFLIK: Few consumers will grieve over the demise of Time Warner Cable should the deal go through. Last year, the company was rated the second-worst in customer satisfaction in the nation. And not just among cable TV companies, I'm talking about all firms ranked. Of course, Comcast also ranked toward the very bottom. Comcast's Roberts spoke keenly about the savings the company could achieve by spreading out its costs. But Craig Aaron argues those savings are very rarely passed on to the company's paying subscribers. Aaron is the CEO of the consumer advocacy group Free Press.
CRAIG AARON: If this deal goes through, Comcast will be, far and away, number one most influential media company. This would make them, frankly, unstoppable and they would dwarf anybody else.
FOLKENFLIK: In most markets, a single cable provider wins the franchise to operate. Aaron says there's inadequate competition and he argues that Comcast's extended reach in all these fields will give it far too much market strength.
AARON: I think that's why we have anti-trust laws in the first place.
FOLKENFLIK: Comcast argues that the landscape is more competitive than ever, with Netflix and Hulu offering movies and TV online. And it says it would promise not to make it harder for subscribers to use those rival services. Cable and satellite TV providers have to pay companies that own studios or stations for the right to carry their channels. Yet, those two sides have increasingly clashed over costs. Comcast chief lobbyist, David Cohen, told reporters that the deal announced this morning wouldn't give his company any additional muscle.
DAVID COHEN: You guys can be calm. This is not going to have a dramatic impact on our ability to negotiate with you. The difference between having 22 million customers and having 30 million customers in a market that has more than 100 million customers is simply not going to be enormous in terms of our leverage around programming.
FOLKENFLIK: This morning, Christopher Balfe, the CEO of Glenn Beck's network TheBlaze, reacted sharply to Comcast's executives. He tweeted, quote, "Hearing them take a victory lap on how fair they've been is making me a little nauseous." Balfe has labored to get TheBlaze picked up on cable systems. The satellite Dish Network and several cable providers do offer the channel. But Comcast, he told me, failed to take it seriously.
CHRISTOPHER BALFE: There's certainly an arrogance that comes with size.
FOLKENFLIK: Balfe says that's a problem for all smaller channels not owned by other major media conglomerates.
BALFE: There's no incentive for them to be responsive to independent programmers because they're worried about being responsive to Viacom, where there can be repercussions for them not adding a channel.
FOLKENFLIK: Comcast already promises to sell off three million cable subscribers to limit its reach. And it has plenty of friends in Washington. Its executives have given generously to politicians, especially Democrats. But some federal lawmakers have already expressed concerns and the deal will likely attract the scrutiny of government regulators and anti-trust lawyers.
Regardless, a chilling cautionary tale looms over the pact. Time Warner Cable used to be a part of the conglomerate AOL Time Warner, which was created in what's now widely considered the worst corporate merger of all time. David Folkenflik, NPR News, New York. Transcript provided by NPR, Copyright NPR.