Cable merger stirs opposition in Congress

Getty Images

Lawmakers on both sides of the aisle are pledging close scrutiny of a proposed $45 billion merger between Comcast and Time Warner Cable.

ADVERTISEMENT
Voices opposing the planned merger have so far drowned out the supporters, but hearings on the issue in the coming weeks will reveal where lawmakers stand.

Critics like Sen. Al Franken (D-Minn.) say the merger is likely to leave people with higher bills and poorer service.

“There’s not enough competition in this space, and what we need is more competition, not less,” Franken said in a statement to The Hill.

“We just can’t end up in a situation where cable companies are getting bigger and bigger, all at the expense of consumers who keep paying more and more.”

Franken has been the most vocal critic of the cable companies’ plans, but he’s not alone.

Senate Commerce Chairman Jay Rockefeller (D-W.Va) said after the deal was announced that it “raises serious questions that deserve thorough scrutiny.”

The question, Rockefeller said in a statement, was whether or not the combination of the cable companies would create lower prices and a more choices for consumers.

“This has not been my experience with previous mergers of this size,” he said.

Lawmakers have so far been hesitant to launch full-throated endorsements of the deal, which might seem premature before a formal congressional inquiry.

Comcast and Time Warner Cable are also major congressional donors, so lawmakers might be leery of appearing too close to special interests. The two companies’ political action committees spent a combined $4.5 million in the 2012 election.

Supporters of the planned merger say the blowback in Congress is typical for business deals of this size, but rarely has a major affect on the outcome.

“This is the same merger theater that takes place every single time there’s a merger,” said Berin Szoka, president of the technology policy think tank TechFreedom.

Lawmakers and consumer advocacy groups “will cry that the sky is falling and that this merger is the end of the world and they grandstand about it because it’s not really about that merger,” he said. “It’s because they’re using the merger to stir up public support for their own regulatory agenda.”

“In short, it’s political theater and it’s based on the idea that big is bad.”

Lawmakers are limited in their ability to affect whether or not the merger is approved, but can try to influence the process by making noise on Capitol Hill.

The final decision rests with regulators at the Federal Communications Commission (FCC), which will oversee the consumer interest aspect of the potential deal, and either the Department of Justice (DOJ) or the Federal Trade Commission, which will probe the antitrust side.

“Ultimately, I don’t think that Congress will do anything that ultimately much affects the Department of Justice’s or FCC’s bottom line decision as to whether to allow the merger to go forward or not,” said Randolph May, president of the Free State Foundation, a think tank. He nonetheless said it was appropriate for Congress to debate the issue.

House and Senate antitrust subcommittees have both said that they will hold hearings on the proposed merger, though neither panel has set a date.

A Comcast spokeswoman said that the company is planning to file a statement with the FCC in late March, and expects congressional hearings to come after that. 

“That’s going to be a time for [lawmakers] to plant their flag, say this is where is stand, ask those hard questions, raise issues that we might not have seen in news articles,” said Martyn Griffen, a government affairs associate at the consumer advocacy group Public Knowledge.

“You have constituents who are writing in saying ‘I am a customer of this company and I am concerned,’” Griffen added. “To have a lawmaker talk to [regulators] one on one in a public forum saying: ‘My constituent says X and they have these concerns,’ that puts those concerns front and center.”

Combined, the two cable companies would have a total of 30 million subscribers, serve about 30 percent of the U.S. market and be in 19 of the 20 largest markets.

Comcast and Time Warner Cable don’t currently compete in the same areas, the companies have been quick to note, and Comcast has offered to drop 3 million of its customers to stay under 30 percent of the U.S. market. Regulators at the FCC have previously set that limit for cable TV companies, though courts have since thrown out those rules.

The combined company’s size may prompt lawmakers to turn the hearings into a fight over net neutrality, the idea that Internet providers should be even-handed in their treatment of traffic.

“Time Warner Comcast is so huge that it clearly could affect the profitability and ability of major content providers, particularly those that use a lot of bandwidth like a Netflix, like a YouTube,” said Matthew Cantor, an antitrust lawyer at Constantine Cannon.

“If there’s anything the legislature is going to focus on, it’s that.”

Szoka, at TechFreedom, said a larger cable company might actually be able to lower peoples’ bills, since it will have more leverage with content producers.

Instead of fighting the deal, Szoka that lawmakers’ time might be better spent on updating the law underpinning the FCC or investing in infrastructure to make it easier for broadband companies to expand their service.

“These are all things that Congress could be spending its time on that would be very constructive instead of wringing their hands about a merger that is going to go through anyway.”

Sena Fitzmaurice, the Comcast spokeswoman, said that the company’s compliance with terms of its 2011 merger with NBC should reassure most lawmakers about the Time Warner Cable deal. 

“There sort of is the cast of usual suspects who are always opposed to us in transactions and we’re very proud of how we’ve lived up to the conditions in the NBC Universal transaction,” she said.

“The FCC and the DOJ took a very careful look at that transaction and imposed those conditions and we’ve been living up to them.”