Business

Can the Government Block the Comcast-Time Warner Cable Merger?

It would create a national behemoth out of two already-maligned companies. Then again, it's hard to make the anti-trust case if the cable providers barely compete for any customers.

By Jordan Weissmann
Reuters
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The Internet is full of grumbling this morning over the news that Comcast plans to buy Time Warner Cable—a deal that would combine the the nation's two largest cable providers, both of which are already loathed for their villainously awful customer service, into one big ole' leviathan controlling just less than 30 percent of the pay-television industry.

So you may be wondering, is there any chance the federal government will step in to stop this union?

Any merger this huge is going to earn scrutiny from Washington regulators. And since this deal involves the telecom industry, it will have to make it past two hurdles. The Justice Department and Federal Trade Commission will need to decide whether the corporate marriage passes muster on antitrust grounds, while the Federal Communications Commission will get to weigh in on whether it's in the "public interest."

Comcast, for its part, argues the deal won't harm consumers because, gigantic as it and Time Warner Cable already are, the two don't actually compete for customers in any local markets, as shown in this handy GIF from Quartz.

Comcast and TWC maps

That's one reason to believe that antitrust concerns won't scuttle this merger, even though it would further consolidate the cable industry nationally.* As for the "public interest" angle, Comcast has released a fact sheet that more or less says it currently offers better service than Time Warner Cable, such as faster Internet, so its new customers will really be getting an upgrade.

But that might not be the end of the story. Back in November, when whispers about a potential Comcast-Time Warner Cable union first started, a knowledgable former U.S. official told the Wall Street Journal that regulators might worry that the merged companies would have too much power over content providers. With so much of the national television and broadband market locked up, a super-sized Comcast would have vastly more power to bargain with companies like Netflix or ESPN.

“The FCC would be concerned that Comcast would have de facto control over what content would be available on television,” industry analyst Craig Moffet told Bloomberg. “If a TV programmer couldn’t cut a deal with Comcast, they wouldn’t exist. Comcast becomes a behemoth.”

Those sorts of concerns might not stop the deal in its tracks. Rather, the government could approve it with conditions designed to keep Comcast in check and competition alive, much the way it did when it approved its purchase of NBC Universal, or when the Justice Department approved the recent merger of American Airlines and U.S. Airways.

Would those conditions amount to much? It's hard to say. But it's probably a little early for reactions like this.

*Over at New York,  Kevin Roose argues that AT&T and T-Mobile made a similar argument to no avail in 2011 before the government challenged their proposed merger in court. I'm not so sure the situations are analogous. When the Justice Department filed suit, it showed that the two wireless providers actually compete head-to-head in at least 97 the country's top 100 markets, containing over half the U.S. population. Meanwhile, Comcast EVP David Cohen told reporters on a conference call today: "This is simply not a horizontal merger. We do not compete in a single market in America."