Reactions To Charter-TWC Deal: Comcast Applauds, Activists Prepare To Fight

“This deal makes all the sense in the world. I would like to congratulate all the parties.

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.

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.

…We will carefully examine Charter’s case, in particular its arguments for why this transaction is supposedly better for competition in the broadband and pay-TV markets than new investment.

[The debt Charter will assume to make the deal] will lead to deterioration in the newly combined TWC, Charter and Bright House’s balance sheet strength and credit metrics to a level not consistent with a family investment grade rating. …Moody’s anticipates that [its review of the transaction] will result in a multi-notch downgrade of TWC’s long-term debt ratings below investment grade status.

Regulatory approval is no longer a given but we expect this is highly probable and greater than Comcast-Time Warner. The issue behind Comcast-Time Warner was broadband market power of 57%+, programming procurement and ownership of NBCU/Hulu. Charter-Time Warner-Bright House carry none of these issues but conditions around merger approval could still exist.

One of the biggest questions about Charter and Time Warner Cable is whether the deal is in the public interest. Frankly, we’re skeptical. When it comes to cable consolidation, history teaches us to be very concerned about the benefits for consumers. 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.

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.

We have two fundamental concerns about the Charter/Time Warner Cable merger. First, continued consolidation on the distribution side of the industry is not in the interest of content creators or consumers. Second–and this has not received much attention–is the fact that Charter Communications and Liberty Media are very tightly linked with Discovery Communications, which owns 13 cable networks in the United States alone. In other words, this merger is not a pure ‘distribution’ play. We are concerned that, without carefully crafted restrictions, the merged Charter/TWC entity will exercise its leverage to favor Discovery content. All content creators should have equal, non-preferential access to the digital pipeline (that is, the wire carrying cable television programs and Internet service, including video streams, to consumers).