Last month, cable TV giant Comcast announced it had agreed to buy Time Warner Cable for U.S. $45 billion, merging the largest and second-largest cable companies in the U.S.
While the raging debate over the advisability of the merger focuses primarily on TV, ultimately the far larger question will be our future access to the Internet.
For cable TV users, the impact of the merger on fees and (cough) service is clearly of concern. But the more important, complex — and cloudy — discussion should be about the future of our connection to the Web. Most of us could face major changes to how we view content in the Internet — and at what cost?
In this first installment of a two-part series, I’ll provide some background on the Comcast/Time Warner Cable merger — and some of the more obvious ways it could impact the millions of affected broadband users.
Merging markets: The art of the deal
On the surface, Comcast’s proposed purchase of Time Warner Cable looks like any other billion-dollar merger of an industry’s two largest players: consolidated operations, reduced overlap, economies of scale, and larger customer base are all supposed to lower customer costs and provide better service. (Show me one case where all that has come to pass.)
But the Comcast/Time Warner Cable merger is especially complex — far more so than, say, the melding of Compaq and HP. Because for the cable industry, the Holy Grail is to both own and deliver content — to essentially control the media you want to watch and the pipes that deliver it.
And Comcast has worked on that goal more diligently than most. For example, it bought NBC Universal a year ago. Watch a show on NBC, and you’re watching Comcast. Pay to see a movie from Universal, and it’s Comcast. Operating under the XFINITY brand, the company has about 22 million cable customers in 40 states. With about $65 billion a year in revenues, Comcast is widely recognized as the largest media and communications company in the world.