A Time Warner Cable Inc. shareholder has already filed a lawsuit designed to block the $45.2 million buyout of the nation’s second-largest cable provider by the first, Comcast, saying that the deal will be bad for Time Warner investors.
But customers and consumer advocates are also objecting to the planned merger, saying that the two companies, which are already rated as the cable industry’s worst in terms of customer service, will only go downhill when they combine into one mega-company with 30 million subscribers.
At the same time, the new Time Warner – Comcast company will have leverage to drive prices up, while potentially narrowing consumer viewing options as well.
While the cable industry as a whole regularly scores low marks in customer service rankings, a 2013 survey by the American Customer Satisfaction Index named Comcast as the worst and Time Warner next-to-last in customer service.
“The idea that the two largest cable companies are going to get bigger and more powerful is not one the average consumer is going to feel very happy about,” cable-industry expert Phil Swann said.
While customers see only their own monthly cable bill, they often don’t realize that all cable channels, such as HBO, AMC, and A&E — homes of popular programs such as Game of Thrones, Mad Men and Duck Dynasty — pay fees to the cable companies for the privilege of being carried on their service.
With its new, massive subscriber base, a merged Comcast and Time Warner company will be able to demand higher fees from those cable providers, who will be forced to pay because losing access to those subscribers is an even more damaging option.
Those that refuse to pay higher fees will simply be dropped by the new Time Warner – Comcast company and become inaccessible to the 30 million homes that rely on its service. That could affect smaller cable channels, such as IFC and Logo — or even larger channels who won’t play along — ending up with fewer viewing choices for subscribers.
Another concern for consumers is the new company’s control over content. Comcast owns the TV and film giant NBCUniversal. But the new company’s chief competitors such as Verizon and AT&T own no content companies. This arrangement would give the merged Time Warner – Comcast company much greater control over how movies and TV shows are distributed and how they are priced.
The merger still must pass regulatory scrutiny from the federal government, which has to approve the deal for it to move forward. But numerous members of congress receive substantial contributions from both Time Warner and Comcast. Comcast alone has donated over $800,000 to current congress mmebers.
New York Senator Chuck Schumer, who sits on the Senate anti-trust committee which must okay the deal, not only received more Time Warner money than anyone else in congress, but his brother — corporate lawyer Robert Schumer — played a major role in the Time Warner – Comcast merger and was named “Dealmaker of the Week” last week by American Lawyer magazine for his work in making the buyout happen.