What the Comcast Purchase of Time Warner Cable Means for Cord-Cutting – and Consolidation

What the Comcast Purchase of Time Warner Cable Means for Cord-Cutting - and Consolidation

“It certainly forces the rest of the cable industry to consolidate,” one analyst tells TheWrap

Comcast’s swallowing of Time Warner Cable creates a staggeringly large media behemoth that controls 30 percent of the pay cable market, but analysts say it is part of the ongoing consolidation in media distribution driven by the rise of challengers to the cable industry.

“It certainly forces the rest of the cable industry to consolidate,” Matthew Harrigan, analyst at Wunderlich Securities, told TheWrap.  “It was an amazing deal for Comcast. It puts them in the largest advertising market and in reach of a lot of opinion makers and media giants on the coasts.”

Also read: Comcast Confirms $45.2B Time Warner Cable Purchase

He added: “Nobody else is in a position to bid like they can; they annihilated the bidders.”

The horizontal merger is what media observers have been predicting for some time, as cable companies compete with satellite providers like DirecTV, streaming companies like Netflix and even upstart cord-cutting distributors like Aereo.

Several analysts said it will likely drive still more consolidation among cable and satellite companies including Cox, Charter and John Malone’s Liberty Media.

“I’m sure Malone’s not waking up happy this morning,” said Tony Wible, analyst with Janney Montgomery Scott.

“TV networks are ultimately threatened and it could lead to more consolidation among TV networks. They will push for virtual companies and internet companies like Netflix and Amazon, so they can offset this consolidation pressure.”

Also read: Consumer Groups Quick to Warn Against Comcast Deal to Buy Time Warner Cable

With the acquisition, which will need to be approved by federal regulators, Comcast easily becomes the loudest voice in the cable industry, where its $139 billion market cap combines with the $45 billion purchase of TWC.

By comparison Charter Communications, which was trying to mount a hostile takeover of TWC, has a $13.5 billion market cap.

Consumer groups will warn that the consolidation creates a near-monopoly in the pay cable space, and they are right about that. The more powerful Comcast becomes, the more likely cable prices may go up and customer service go down. (Ever try waiting for the TWC cable guy to show up? TheWrap's Tim Molloy did.) Cable companies are already wildly unpopular with consumers.

Also read: Time Warner Cable, This Is Why People Get Mad at You (Opinion)

In the short term, the companies will argue that there will be benefit to consumers in increasing programming choices to video on demand and over mobile. But the deal will also raise concerns over Comcast's control of online video. When the company bought NBC in 2010, the Writers Guild of America argued before Congress that the company was trying to leverage its dominance of the cable market to stifle competition between online video providers and require consumers to pay more for video access.

Time Warner Cable has a near-monopolistic hold on much of New York City, which is now in Comcast's possession. Comcast will also take over other major Time Warner Cable markets including Southern California.

In a conference call with reporters Thursday, executives for the companies argued that the merger poses no threat to competition because Comcast and Time Warner Cable did not overlap in any markets. Comcast is also divesting 3 million customers in order to avoid competitive concerns. (Hence a net gain of 8 million when it takes on 11 million customers from Time Warner Cable.)

But over time, the consolidation is a sign of cable companies seeking to leverage their power because of the rise of cord-cutting competitors.

As one finance site noted on Thursday, the number of cable-video subscribers has dropped by around five million since 2010, with that slide steepening over the past several quarters. “A growing number of households simply use the cable company for a broadband connection rather than programming packages,” said the Daily Ticker.

Said Wible: “There are elements that are pro-consumer, but against that argument is the scary notion that one company would control one third of the country's broadband. It’s not clear what the rules of the internet are going to be and how the government will balance the cable operators’ needs with the needs of companies that are publishing and relying on the internet.”

 Tim Molloy contributed to this article

 

 

  • Tim Dillenberger

    This is just too amazing and scary at the same time.

  • Daniel Sterling Sample

    Dear Blind-Stupid America, Are you so stupid that you can't see what the communication giants are doing with YOUR air waves? The Hollywood Mafia is winning the war against FREE television and gaining control of all the other avenues of communication into America's homes, including the consolidation of all of the cable services and YOUR FREE internet. Don't expect President Obama or the FCC or Congress to pull the plug on the TWC/COMCAST deal either. Even if the TWC/COMCAST deal is temporarily blocked, the Hollywood fat cats will find another way to consolidate their control over YOUR air waves. The President doesn't make regular trips into Hollywood just because he loves the sunshine. He loves Hollywood money and travels for free in AIR FORCE ONE which is paid for by YOU, Mr and Mrs American Taxpayer!. There is just too much money being piped into Washington from Hollywood. We are basically screwed, America! Daniel Sterling Sample in beautiful downtown Hollywood. sample.daniel@gmail.com (To be honest, I will be very surprised if this email reaches you eyes. THE WRAP has been very good at not censoring these posts,but it can't last much longer)

  • Daniel Sterling Sample

    Dear Idiot America, First, I would like to thank THE WRAP for leaving my post “Dear Blind-Stupid America” up for the past 24 hours, a true act of courage…..Meanwhile, the Hollywood gangsters have hit a “new low” in their zeal to rob America's access to FREE TV and, at the same time, corner the market for cable and the internet. Blatant racism has always been a useful tool for the Hollywood Mafia, but their latest tactic to push America toward PAID TV is nothing less than brilliant, diabolical, but brilliant. Operating in illegal unison, all of the TV networks have begun to systematically degrade programming on FREE TV while raising the quality of all TV programming on all channels that require MONEY to utilize. Here comes the really clever part in their plan! All FREE TV is rapidly becoming African-American oriented! On the surface, this move appears terrific for the African-American workers in the TV industry until they realize that they are being manipulated by the racist Hollywood Mafia. The non-African American TV audience is being herded toward PAY TV while the African American TV audience is left with substandard programming which will continue to degrade until FREE TV is stricken from the air. The COMCAST/TWC merger is a major step toward the destruction of FREE TV and African-American programming. Please. please don't forget that America's airwaves belong to the American people. I truly believe that the Hollywood Mafia can not be stopped. They hold all of the cards, including a President who sold out to Hollywood. I am still proud of America's willingness to vote an African-American into the White House…..Daniel Sterling Sample in downtown Hollywood. sample.daniel@gmail.com

  • Daniel Sterling Sample

    AN OPEN LETTER TO THE FOUNDER AND CEO OF “THE WRAP” MS. SHARON WAXMAN Dear Sharon, Thank you for your willingness to allow my postings to remain on “THE WRAP”. Undoubtedly, my repeated referrals to the powers that control Hollywood as “THE HOLLYWOOD MAFIA” has raised a few eyebrows along Sunset Boulevard. These are the same powers that can, should they so desire, shut down “THE WRAP” faster than you can say “ARSENIO”. It may be that the Hollywood Mafia has chosen to ignore my postings, believing that ignoring me is their best position. They may be right. The inevitability of Hollywood's consolidation of PAY TV and the destruction of FREE TV seems certain. Why bother with one tiny voice on the streets of Hollywood? “So why” you ask, “does one starving screenwriter care if Hollywood takes over total control of America's TV programming and broadcasting?”
    Bottom line, you can kick a hungry, starving dog laying in the dust, just so many times till he jumps up and bites you on the a–! I have had my very best screenplay plagiarized TWICE by two different Hollywood Studios and I have been powerless to stop them. Daniel Sterling Sample in beautiful downtown Hollywood sample.daniel@gmail.com P.S. Congress may hold an obligatory hearing or two regarding the TWC/COMCAST power grab before they “rubber stamp” it, but I wonder if something else might interest them? Is America's largest export (entertainment) also America's largest “Laundromat”? I don't think America's 99% or Congress or President Obama would care to have that connection aired out!

  • Daniel Sterling Sample

    Is the COMCAST/TWC MERGER A DONE DEAL?! The PBS NIGHTLY BUSINESS REPORT on Monday, Feb 24,2014 barely mentioned the deal, not even questioning the grave results that such a union would have on America's access to the internet or FREE TV! I am a little sick at my stomach! Daniel Sterling Sample in beautiful downtown Hollywood. sample.daniel@gmail.com