One Way or Another, Big TV Is Getting Bigger. Will You Care?
Can Comcast, the country’s biggest pay-TV provider, really get bigger?
That’s the scenario that’s floating out today, sparked by CNBC’s report that Time Warner Cable, the country’s second-biggest cable company, might be looking to Comcast as a white knight. That’s because Charter Communications, another big cable operator, is getting ready to make an offer for Time Warner, and Time Warner either wants a different buyer or at least someone to raise the price for its eventual takeout.
A Comcast-Time Warner Cable deal would mean that the combined company would have some 33 million pay-TV subscribers — or about a third of the nation’s market. There’s no law preventing that, but the deal would certainly get lots of regulatory scrutiny, since the company would have a lot more leverage when it came to negotiating deals with programmers.
A lot more leverage: “A company of that size would arguably have de facto control of what content could and couldn’t exist in the U.S. (a programmer that failed to get a distribution deal with Comcast arguably wouldn’t be economically viable),” analyst Craig Moffett notes in a blog post today.
But wait a minute. If Comcast and Time Warner Cable is a regulatory problem, why isn’t other consolidation a problem?
After all, John Malone, the cable veteran who has been loudly calling for his industry to shrink down, has been clear about his intentions: He thinks the cable providers need to bulk up so they can get better rates from programmers.
But Charter, backed by Malone, only has around four million subscribers. Tacking them onto Time Warner Cable’s base of 11 million would still make the company smaller than Comcast and its 21 million subs (it would also be smaller than DirecTV, the country’s biggest satellite TV company).
So that would be fine with regulators, according to the industry’s conventional wisdom. (Update: Now Bloomberg reports that Comcast and Charter are mulling a plan to acquire Time Warner Cable together, and then split the company up, presumably to make the deal easier for regulators to approve.)
What’s unlikely is that any consolidation, of any sort, benefits consumers. Your pay-TV bills certainly aren’t going down: Even if you believe the “bigger operators = more leverage” theory, you can’t believe the bigger cable operators will be passing along their savings to their customers.
And any consolidation of any sort reduces the number of buyers for TV programming, which makes it even harder for small channels like Al Jazeera America, or the Tennis Channel, or Ovation, or whatever, to find their way onto your TV guide.
What would be great to see is a scenario where consumers end up with real choices — as in, more than a couple — when it came to pay TV and broadband services. Very hard to see that happening, which means it’s hard for consumers to care whose logo is on their set-top box.