Three First Impressions on the Comcast-Time Warner Deal

February 18, 2014

Three First Impressions on the Comcast-Time Warner Deal

Here are three first impressions of the ways advocates and opponents of the Comcast-Time Warner tie-up are positioning the deal, and how regulators ultimately will assess it.

Comcast is correct that the deal is not anticompetitive in the geographic markets where the two companies now operate because there is no overlap.  However, taking these geographic markets off the table does not mean the deal is pro competition either, as there may be significant impacts on other important markets.

Similarly, opponents of the deal reacted quickly that the combined entity – a merger of the two largest cable providers – would be too big.  Size alone is not a persuasive argument to block the deal or impose conditions; opponents need to demonstrate that the new entity would be able to use its market power to harm customers or consumers in significant ways.

Ultimately, one of the key issues regulators will examine to determine whether the deal goes forward, with or without conditions, is whether the new entity would have too much power in negotiating terms with television programmers who must have access to their 30 million plus cable customers to remain viable.  That issue also could have a big impact on cable viewers in terms of the diversity and quality of programming. 

The bottom line is that the fate of this merger does not rest on its geography or size.  As with most regulatory reviews, it will come down to how the relevant markets are defined, and how the new entity’s power in those markets is assessed.

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