Comcast and Time Warner Aren't Creating a Monopoly. They Already Had One

Time Warner Cable and Comcast announced a $45-billion merger on Friday, meaning that the two largest cable providers in the nation will become one, possibly by the end of this year.

Time Warner Cable and Comcast announced a $45-billion merger on Friday, meaning that the two largest cable providers in the nation will become one very big cable provider, possibly by the end of this year. This is obviously great news for both Time Warner and Comcast, as they expand their empire. As for the companies' combined 30 million customers, well, the picture doesn't look so bright. 

Before Comcast's acquisition of Time Warner can go through, the company will have to get approval from the FCC and the Department of Justice. Either department could step in and stop the merger over antitrust concerns, but Gizmodo and others argue that they probably won't. That's because, despite being huge "rivals" Time Warner and Comcast actually have very little market overlap. They've already divided up the nation in such a way that they rarely compete with each other for same customers.

The company is expected to argue instead that it faces emerging competition from Netflix, Hulu (of which Comcast owns a third, through its ownership of NBC Universal), and Google Fiber. In a memo quoted by GigaOM, Comcast argued that "Comcast believes that there can be no justification for denying the company the additional scale that will help it compete more effectively." The company also filed a summary of public interest benefits from the merger. Here's what it says about increased competition:

Satellite companies have taken share from traditional cable companies, and the vigorous new entrants like Verizon FiOS and AT&T U-verse have also entered the video and broadband space. Google has also introduced Google Fiber in a number of markets across the country...

...A number of online businesses like Apple, Google, Amazon, Hulu, Netflix, and a host of smaller companies are entering the online video space and trying to position themselves as competitors. While we view online businesses as complementary to our business, previous antitrust concerns about further cable consolidation are truly antiquated in light of today’s marketplace realities.

However, the deal will give Comcast even more control over the nation's broadband network, potentially giving it even more influence over consumer access to some of the very services it names as competition. And since Comcast already owns one major content provider — NBC — that's a growing, rather than a brand-new concern for the company's expansion. It's possible that this latter point would be most concerning to regulators. But Comcast plans to argue that the deal will increase broadband speeds overall for consumers, and that Time Warner customers will now be able to take advantage of its "cloud-based set-top boxes." 

There is a silver lining for TV watchers though, as the Wall Street Journal points out: As Comcast had to do for its NBC merger, it's quite possible that the FCC could use the acquisition of Time Warner as an opportunity to impose new consumer protection limitations on the company before approving the deal. Those could include the reinstatement (or rewriting) of net neutrality rules for Comcast, even though a court ruling just struck them down.