Comcast-Time Warner Cable questions bubble up as Senate hearing approaches

Questions and concerns are bubbling to the surface as Comcast (NASDAQ: CMCSA) prepares to justify its proposed $45.2 billion Time Warner Cable (NYSE: TWC) acquisition to the Senate Judiciary Committee this Wednesday.

There's already a new word--monopsony, meaning a market condition in which there is only one big buyer for services or goods—being tossed around, a story in the Philadelphia Inquirer said. In this case, the combination of the number-one and number-two cable operators would create a single major content purchaser and therefore determine economic terms for programmers.

Of course Comcast's argument is that it won't do that at all and that the company will even sell off three million TWC subs to avoid any conflict.

"Comcast is one of many buyers of video programming," Comcast spokeswoman D'Arcy Rudnay told the newspaper.

That doesn't jibe with what Minnesota Sen. Al Franken—a frequent critic of these types of media mergers—believes.

Franken told the newspaper he was worried the combined company "will result in higher prices, fewer choices and even worse service for consumers." Franken acknowledged Comcast's "army of lobbyists pushing this deal" and added "we need to make sure the consumers' voices are being heard."

One consumer who had some questions he wanted heard is David Carr who, in a New York Times piece, queried: "How can the largest cable company in the country bid to buy the second-largest and gain control over 19 of the country's top 20 markets—corralling a 30 percent market share in cable and a 40 percent share in broadband—and there be no serious questions?"

Carr then proceeded to offer six of his own questions, including an overarching view of the entire cable TV industry.

"Cable is a declining legacy business, shrinking even as the merger works its way through the regulatory process," Carr pointed out. "So when Comcast suggests it has competitors in DirecTV and Dish, satellite companies that cannot provide high-speed connections, it isn't true, practically speaking."

The question of the combined company's power over non-cable-TV matters is also expected to draw attention at the Judiciary Committee.

Wow! Chairwoman Colleen Abdoulah used last week's American Cable Association (ACA) Summit to define that organization's feelings about the merger.

"We're concerned about it," said Abdoulah, who is also the ACA's chairwoman.

The organization of small cable operators probably will not go to the mattresses to fight the deal, though, because "that would be ridiculous because it will probably go through," she said.

The deal will also get scrutiny from the FCC, which has placed it on a docket for review even though Comcast has taken no actions that would require attention from that body.

FCC Bureau Media Chief Bill Lake, in a story covered by Broadcasting & Cable, suggested that this was just an attempt by the regulatory body to stay ahead of the curve by starting an information-gathering process.

"We anticipate that such information will be necessary to develop a more complete record on which to base the Commission's decision," he said.

For more:
- see this Philadelphia Inquirer story
- and this New York Times story
- and this B&C story

Related articles:
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Rumor mill: Dish Network's Ergen courts DirecTV's White
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