Mergers and acquisitions of power
Comcast deal to purchase Time Warner promises profits, threatens public
Published: Tuesday, February 18, 2014
Updated: Tuesday, February 18, 2014 23:02
A deal proposed last week threatens to kill any notion that Americans still believe in competitive capitalism.
Just in time for Valentine’s Day, Comcast wooed Time Warner Cable (TWC) and investors by offering $45.2 billion to purchase the company. The deal would merge the two largest cable companies in the country, which control 37 and 20 percent of the communications market, respectively.
But why should we care? According to Comcast CEO Brian Roberts, this deal is good for stockholders, consumers and both companies.
The merger is a godsend for cable companies facing dwindling subscriptions and a great deal for stockholders.
Benefits for consumers, and the American public at large, remain debatable.
The deal sounds bad on its face. Any American who sat through eighth grade U.S. History tends to maintain a gut-reaction against anything resembling monopolistic trust building.
This merger is a step toward monopoly by what is already a cartel, and a move away from everything for which the Sherman Antitrust Act of 1890 fought.
It’s worth reviewing exactly why monopolies were so terrible in the first place. Consider the iconic Joseph Keppler political cartoon, “Bosses of the Senate,” with the bloated trusts of the late 19th century looming over the Senate.
The implication was simple – ravenous corporations had all but hijacked our democracy.
The issue is not just competition. Comcast has done well to publicize that it does not compete directly with TWC in any local markets.
Beyond this, much has been made of what effect this will have on broadband Internet innovation. With the two largest broadband companies becoming one, there is minimal motivation for Comcast to pursue innovative solutions to the national issue of slow Internet.
Beyond this, much has been made of what effect this will have on broadband Internet innovation. Given that the United States is currently No. 33 in the world in broadband speeds, we could hardly get worse. This deal may not affect that ranking.
The problem is the power that comes with size. This deal, if allowed to proceed, amounts to the Senate, Federal Communications Commission (FCC) and Department of Justice constructing their own master.
Comcast spent $18 million on lobbying last year alone. The company’s 2009 bid to acquire NBC Universal was promptly passed. Meredith Attwell Baker, the FCC regulator who helped pass that deal, now works for Comcast as a lobbyist. Comcast’s CEO regularly goes golfing with President Obama.
It should be clear how problematic and dangerous Comcast’s already cozy relationship with our government is – the government should be protecting the public interest as opposed to corporate interest.
This deal is simply not in the public interest. It serves stockholders. It serves CEOs and corporations.
Forgetting the 1880s is understandable, but have we also forgotten 2008? We’ve seen what happens when our state becomes the marionette of companies and is no longer beholden to the citizenry.
Claims have been made that regulations will swiftly follow the deal, and these regulations will ensure we, the public, are protected. But a government that can hardly pass a budget will likely have some issues passing highly specific regulations on the cable industry, particularly ahead of the mid-term elections this November.
More power over our government, more power over content providers, more control over what we watch on TV or can access online. This is not fear mongering. It is a lesson from history.
It would serve us well to remember why companies with unfettered power cause problems and why Sherman’s antitrust regulation was passed in the first place.
Perhaps if our regulators reviewed their middle school history textbooks, they would know why this deal should not go through.
That is, if they take seriously their credo to serve the public interest.