Free Press: Charter/TWC Faces High Hurdle - Broadcasting & Cable

Free Press: Charter/TWC Faces High Hurdle

Consumers Union expresses skepticism
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Seeming to pick up on FCC Chairman Tom Wheeler's statement that the proposed Charter/Time Warner Cable deal will need to be pro consumer, rather than just not lack anticompetitive harms, Free Press was quick to brand the deal of no benefit to cable/broadband customers and no boost to competition.

Free Press research director Derek Turner used the "C" word--Comcast--to register the group's concerns about the deal, which Charter is valuing at $78.7 billion, though Free Press cited a $56.7 billion valuation.

Turner said Free Press would look at Charter's arguments for the deal's pro-competitiveness, but says a simple invocation of scale--creating a stronger number two to Comcast's number one--would be needed.

"These potential mergers won't make Charter as massive as a merged Comcast-Time Warner Cable would have been but they raise similar public interest concerns, and the FCC should apply the lessons learned in its prior review here," Turner said.

Comcast pulled the plug on its attempted purchase of Time Warner Cable after the FCC signaled its combination of broadband subs made it problematic. The FCC under FCC Chairman Wheeler has made it clear that the more broadband subs one company owns, the more incentive and opportunity it has as to be a "gatekeeper" to access to broadband.

"The cable platform is quickly becoming America's local monopoly broadband infrastructure. Charter will have a tough time making a credible argument that consolidating local monopoly power on a nationwide basis will benefit consumers," he said. "Indeed, the issue of the cable industry's power to harm online video competition, which is what ultimately sank Comcast’s consolidation plans, are very much at play in this deal.

Consumers union said it had its doubts about the merger's consumer-friendliness.

“One of the biggest questions about Charter and Time Warner Cable is whether the deal is in the public interest.  Frankly, we’re skeptical," said  When it comes to cable consolidation, history teaches us to be very concerned about the benefits for consumers,” said Consumers Union policy counsel Delara Derakhshani. “Prices for cable and broadband continue to go up, and customer service is dismal. In a customer satisfaction survey of 17 cable providers by Consumer Reports, Charter ranked 14th, and Time Warner Cable was 16th.  We’re going to meet with federal regulators to make sure the consumer perspective is heard.”

For its part, the Writers Guild of America, West, says it is exremely concerned.

“Once again, pay TV providers are attempting  to reduce competition and increase control over cable and Internet distribution. Mergers and consolidation rarely serve the public interest as distributors use their increased power to squeeze programmers and raise prices for consumers. The WGAW is extremely concerned with what the proposed Charter-Time Warner Cable merger will mean for content creators, consumers and competition.”

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