Why The Comcast-Time Warner Merger Matters

The deal could create yet another massive media behemoth. Here's how it impacts you.

By Jamilah King Feb 24, 2014

Despite what you may have heard, the biggest thing in media these days isn’t "House of Cards" or any new iPhone. It’s Comcast’s proposed merger with Time Warner, a move that could create yet another massive media behemoth. The deal has been widely panned by media watchers–the editorial board of USA Today warned its readers to view the deal with skepticism, for instance. But, as is often the case with huge corporate mergers, it’s still a little unclear what the deal will ultimately mean for us.

First, what happened?

At the beginning of February, Comcast announced that it had reached an agreement to merge with Time Warner in a deal that’s estimated to be worth more than $42 billion. By any stretch of the imagination, it’s a blockbuster deal that would create an unparalleled media company of more than 30 billion subscribers spread across America’s largest media networks, including New York City, Los Angeles, Chicago, Philadelphia and Washington, D.C.

When the merger was announced on February 14, Comcast’s CEO Brian Roberts insisted that it is "pro-competitive" and "in the public’s interest."

But many observers disagree, saying that the merger will only consolidate a market that’s already short on choices. It’s also a sentiment that’s shared by people whose money is invested directly into Time Warner. The company’s shareholders have launched a potential class action lawsuit in the New York Supreme Court in an effort to stop the merger. The suit alleges that the company’s agreement with Comcast breached the ethical relationship with its shareholders and the deal itself puts the company on a collision course with industry regulators.

But what’s the big deal?

America’s telecommunications history is rife with massive companies, including the government-sponsored monopoly that the Bell System enjoyed for almost a century premised on the idea that the country’s communications infrastructure worked best when it all flowed through one company. In the early 1980s, the Federal Communications Commission (FCC) decided that monopolies weren’t such a good thing after all. Why? Because competition drives innovation.

But to really get a sense of the backlash to this proposed merger, it’s important to understand some of its history. Since the introduction of network television in the early 20th century, there have been two major interruptions in American TV. The first was the introduction of cable in the 1980s, which allowed viewers to pay for specialized channels and gave them more options. Theoretically, cable TV allowed for a playing field that was just a little bit more fair because creators and distributors could bypass the three major networks – ABC, NBC and CBS – and still reach their target audiences.

But there are only a handful of cable companies, which means that prices are steep. And since the late 1990s, costs have skyrocketed, from between $7 to $11 to an average of $86 a month. Media scholar Tim Wu pointed out at the New Yorker that last year, Comcast collected around $150 each month, per customer. 

The second major disruption to television came in the form of the Internet. All of a sudden, viewers didn’t have to pay exorbitant rates to see their favorite shows. They could watch pirated versions online. Or they could go the legal route and subscribe to services like Netflix, which allows its monthly subscribers to stream commercial-free online content for as little as $8 a month.

But Netflix has had a notoriously rocky relationship with the major networks whose programming still drives American culture. Many of them, including NBC Universal and Disney-ABC Television Group, even started their own company, Hulu, to directly compete with Netflix. The Comcast merger would allow the company to go toe-to-toe with companies like Netflix, Amazon Prime and YouTube, which would be the gatekeepers’ way of slowing the disruption caused by the Internet.

How will this affect people of color and women?

It’s common knowledge that women and people of color are underrepresented in the media. That may have something to do with the fact that the media ownership world is overwhelmingly white and male. While women represent 51 percent of the U.S. population, they hold less than 7 percent of all TV and radio station licenses.  And while people of color make up roughly 36 percent of the population, they also only have 7 percent of radio licenses and just 3 percent of TV licenses. Free Press, a Washington, DC-based media watchdog group, argues that "[a]s consolidation cuts back on the number of TV and radio station owners, women and people of color have fewer chances to become media owners and promote diverse programming."

Is this mainly about TV?

If you’re reading this that means you enjoy a working Internet connection. The merger could mean that even if you don’t want cable, you’ll still have to sign up with Comcast as your Internet service provider or risk paying hefty overage fees for data usage on mobile devices. 

Comcast has said in the past that it believes that all Web content should be treated equally a concept known as net neutrality. But, as David Carr points out in the New York Times, there’s no guarantee that the companies that act as Comcast intermediaries like, say, Netflix, won’t then be forced to charge their customers more to deliver streaming servies. 

"If the merger is approved, Comcast’s dominance over our nation’s broadband market will be further cemented. This is troubling since the press is reporting that the FCC will allow Internet service providers like Comcast to strike business arrangements with other companies to provide preferential treatment to certain content while discriminating against others," says Joe Torres, senior external affairs director at Free Press. "While Comcast has to comply with Net Neutrality merger conditions until 2018, the company could start discriminating online once those conditions expire — and can do a lot even before then to mess with your Internet traffic in ways that those rules never addressed. Comcast has been clear that this is its vision for the future of the Internet.  This will mean the voices of communities of color and other marginalized groups will have a harder time being heard."

Is this merger a sure thing?

Not quite. The FCC is considering the companies’ formal request, and there’s no exact timeline on how long the process could take. But it’s hard to ignore the fact that barely three years ago, the commission approved what was then considered a mega merger between Comcast and NBC Universal, further shrinking the media broadcast market. Still, the agency is charged with acting in consumers’ best interests.