With a single behemoth purchase, Comcast is creating a dominant force in American entertainment and presenting federal regulators with an equally outsized quandary: How should they handle a conglomerate that promises to improve cable TV and Internet service to millions of homes but also consolidates unprecedented control of what viewers watch and download?
Comcast, which was already the nation’s No. 1 pay TV and Internet provider, says its $45.2 billion purchase of Time Warner Cable will provide faster, more reliable service to more customers and save money on TV programming costs.
If the acquisition is approved, Comcast will serve some 30 million pay TV customers and 32 million Internet subscribers. In Tarrant County, Time Warner serves Arlington, Bedford, Colleyville, Dalworthington Gardens, Euless, Grand Prairie and Grapevine while Comcast does not currently serve North Texas.
But industry watchdogs say the deal will give the company too much power and ultimately raise the price of high-speed connections.
“How much power over content do we want a single company to have?” said Bert Foer, president of the American Antitrust Institute, a Washington-based consumer interest group.
The all-stock deal approved by the boards of both companies trumps a proposal from Charter Communications to buy Time Warner Cable for about $38 billion. It also represents another giant expansion following Comcast’s $30 billion purchase of NBCUniversal, operator of networks like NBC, Bravo and USA, which was completed last March.
Comcast says it will continue to operate under conditions the government imposed when it approved that transaction, including a requirement that it provide standalone Internet service and that it make programming available without discrimination to other providers, including online video providers. However, those conditions expire in 2018, and Comcast CEO Brian Roberts was not prepared to voluntarily extend those into the future during a conference call with journalists.
“Those Internet conditions would apply on Day One,” he said. “How long that goes is not something I want to speculate on, but many years at the very minimum.”
Roberts argued that the cable industry has been losing subscribers for the last decade because of increased competition from satellite TV providers such as DirecTV and Dish and telecom companies like AT&T and Verizon. Despite gaining subscribers in the final quarter of last year, the forecast is to lose more in 2014.
“It’s a very competitive business,” he said. “That being said, we’ve expanded for consumers their capabilities and access to content in remarkable ways.”
The deal is expected to close by the end of the year, pending shareholder and regulatory approvals.
Shares of Time Warner Cable jumped 7 percent, or $9.46, to $144.77 Thursday morning after the deal was announced, while broader trading indexes slipped less than 1 percent. Comcast shares fell more than 3 percent, or $1.74, to $53.50.