Washington Consumer Groups Question Comcast's Reported Bid for Time Warner Cable

Washington Consumer Groups Question Comcast's Reported Bid for Time Warner Cable

Consumer groups suggest a merger of the No. 1 and No. 2 cable giants would likely violate both antitrust and federal communications laws

A report that Comcast is considering bidding for Time Warner Cable drew immediate concerns from consumer groups in Washington, who worry that a combined cable behemoth could raise prices to consumers, reduce their video choices and potentially eliminate the web as a competitor.

The consumer groups suggested Friday that such a deal would likely violate both antitrust and federal communications laws.

“Already you can't launch a new channel without Comcast,”  Matt Wood, policy director for Free Press, a consumer group active in media consolidation fights, told TheWrap. “This would give them so much more power.”

Also read: Comcast, Time Warner Cable Stocks Up on Report Comcast May Buy TWC (Update)

Wood said a Comcast purchase would also reduce “the chance of effective competition” to cable from Internet video sources.

Mark Cooper, research director for the Consumer Federation of America, told TheWrap a Comcast purchase would effectively create a cable “monopsony,” giving Comcast control not only over which cable channels are successful, but access to the web in parts of the nation.

“They would have sufficient share that their buying practice could disrupt the market,” he said. A channel that couldn't get on Comcast wouldn't be able to survive.

“This is a merger that raises fundamental Communications Act and Sherman Act issues,” he said referring to laws overseen by the Federal Communications Commission and the Justice Department, respectively. “There is no avoiding it.”

Both questioned whether a Comcast purchase would pass regulatory muster.

CNBC reported that Comcast was talking to Washington regulators about their view of its acting as a white knight, stepping in to help Time Warner Cable fend off a bid being readied by Charter Communications.

If Comcast bought Time Warner Cable, the deal would merge Comcast, the world's largest media company and the nation's biggest cable provider, with the U.S.'s second-largest cable provider.

A Time Warner Cable spokesman declined to comment on the reports to TheWrap. Comcast representatives did not immediately respond to requests for comment.

Philip Cusick, an analyst for J.P. Morgan in a research note on Friday said the purchase would give Comcast 33 million customers. Cusick said that the combination could create efficiencies, allowing Comcast to cut Time Warner Cable's programming and administrative costs.

Yet Cusick expressed doubt about a deal for Comcast buying all of Time Warner Cable to get Washington approval, suggesting partial sale would be more likely. He said Comast, having recently bought NBC Universal, would have a “very tough” time defending not only the purchase's effects on other cable companies but on alternative media.

“We do not believe that Comcast wants to sign another consent decree like it did when it rolled up NBCU, and it would likely be wary as well of the FCC's desire potentially to require a net neutrality contract as a condition of a deal,” Cusick wrote.