Comcast Hypes Proposed Mega-Merger, But Consumer Watchdogs Cry Foul
By technology editor Ian Bush
PHILADELPHIA (CBS) -- Comcast Corp., the cable company, is big. And it's looking to get even bigger.
The Philadelphia-based company wants to buy the industry's #2 cable television service provider for $45 billion in stock.
But consumer watchdogs already are speaking out against the deal.
Comcast CEO Brian Roberts says if federal regulators approve Comcast's purchase of Time Warner Cable, consumers will benefit.
"This is a transaction for Comcast and for Time Warner that creates creates, literally, a world-class technology and media company with a unique ability to create and deliver groundbreaking products on a near-national platform," Roberts said in a conference call with reporters this morning.
A merger would give Comcast, already the country's largest cable provider, the potential to be in more than one-third of homes across the country that pay for TV -- some 33 million subscribers.
And since Comcast's footprint doesn't overlap with Time Warner's -- plus the fact that Verizon, dish companies, and others are vying for the same customers -- competition doesn't take a hit, according to Roberts.
"It's pro-competitive, strongly in the public interest and, we believe, approvable," he said.
But reaction from consolidation critics has been swift.
"It's just going to put too much media power in the hands of one company and give Comcast way too much control over what Americans watch, read, and download every day," says Craig Aaron, president of Free Press, a public interest advocacy group specializing in media and Internet matters. "This thing dwarfs the AT&T/T-Mobile merger that was blocked by regulators just a couple years ago. This is the kind of proposed deal that is why antitrust laws were invented in the first place. So I think this is going to face serious Justice Department scrutiny."
In 2011, federal regulators approved Comcast's $30-billion bid for NBC Universal after the company agreed to conditions that included maintaining open Internet access rules for a seven-year period.
But the net neutrality debate is again heating up, and Aaron tells KYW Newsradio that broadband consolidation is a threat.
"I think that consumers have real reason to be concerned about one company controlling so much of the media -- not just your cable TV service, but also your Internet connection, and so much media content," he says.
Despite Comcast's promise that the merger wouldn't curtail competition, Aaron is incredulous.
"They're going to be a dominant force in the market dictating what gets carried on cable TV all across the country and what doesn't," he says. "Without Comcast's permission, effectively, it's going to be almost impossible to operate a cable television channel. Because if Comcast doesn't want to carry it, the financial possibilities of someone else doing it are really, really limited."
Roberts, the Comcast boss, is confident the deal will get the thumbs-up.
"We wouldn't be doing this if we didn't think we could get it approved," he said in an interview this morning with CNBC. "We spent a lot of time thinking about it."
Aaron says Comcast's deep ties in Washington could give the company a leg up as it makes its case for merger approval.
"[Comcast's head lobbyist] David Cohen was invited to the state dinner with the French president just two nights ago. President Obama has gone golfing on Martha's Vineyard with Comcast CEO Brian Roberts. They're very well-connected."
Republican FCC commissioner Ajit Pai told the Wall Street Journal last year that "an outright acquisition by Comcast of Time Warner Cable could face a number of hurdles in the Obama administration," with a Republican in the White House likely "more inclined to approve a deal."
US Sen. Bob Casey (D-Pa.) says he's "encouraged" by the agreement.
"This has the potential to create additional jobs in the Commonwealth and further strengthen Pennsylvania's standing as a global leader in media, technology, and innovation," Casey said in a statement. "Comcast is a world-class company and responsible corporate citizen."
But the Communication Workers of America, the union that represents 5,000 workers at Comcast, NBC, and Time Warner, is pushing regulators to carefully review the bid.
"A merger of this size, which would combine two of the four biggest cable operations, raises concerns about quality jobs, competition, consumer cost, market structure, and more," CWA officials said in a statement. "The two companies have a high bar to meet to demonstrate that the merger would be in the public interest."