The Winners & Losers of a Time Warner-Comcast Mega-Merger

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Columbus Circle in New York City, home to the world headquarters of Time Warner.
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Television giants Comcast and Time Warner Cable are getting a bit less creative when it comes to the options its customers may soon have.

Today, Comcast, the nation's largest video, high-speed Internet and phone provider, will go before the Senate Judiciary Committee to defend its desire to purchase the second largest-cable company in America—Time Warner Cable—for $45 billion.

“I think the transaction is a lot less scary, it's a lot less large, and a lot less complicated than some people would like to make it," Comcast EVP David Cohen said during an interview on C-SPAN last month. "This is not a horizontal deal. We don't compete with Time Warner Cable anywhere. There isn't a consumer in America who has a choice between buying Comcast products or TWC products and, at the end of the day, we are going to have under 30 percent of the market so it's not particularly scary."

But some critics of the mega-merger say the implications for consumers—and for innovation—may not be as seamless as Cohen suggests.

One of the most vocal voices banging that drum has been David Carr, media and culture columnist for our partner The New York Times. He wonders how the largest cable company in the country can bid to buy the second-largest and gain control over 19 of the country’s top 20 markets—corralling a 30 percent market share in cable and a 40 percent share in broadband.

"It's very big business, and we're talking about something that is really deeply embedded in consumers' lives," says Carr. "It isn't really about cable, it's about the internet—the internet is sort of like your water faucet or electrical outlet: You expect to turn it on and have it work."

There are two sides to this issue. On the one hand, Carr says that consumer advocates argue that this merger will further centralize an already limited array of choices when it comes to internet providers. Comcast, however, argues that there are other options consumers can choose from, like Direct TV or Dish Network.

"But they can't provide you a hardwired connection to the internet, which is what most American consumers and businesses care about," says Carr. "I think Mr. Cohen would argue that this is a time of fast-evolving business models on the internet and that a company like his needs scale to compete."

Carr adds that Comcast argues that the merger will help them to grow and support their infrastructure in order to compete with companies like Apple, Amazon and Netflix. 

"In the instance of Comcast, you have somebody that controls the pipes and to some degree what goes in them," says Carr. "Don't forget that they own NBC Universal. They not only come to your house with the cable, but they're the ones that give you the TV show 'Community,' for better or worse, and even theme parks."

Outside players are frightened by Comcast, according to Carr.

"What Apple and Netflix would argue, and they would do it quietly because they're really afraid of angering Comcast, is that [Comcast is] controlling the intersect with consumer," he says. "They're the ones who are going to have the skin on your television that's going to decide whether you can watch Netflix in a reliable way, or whether you can get Apple's devices authenticated on your television. They worry that [Comcast is] going to have market power to kind of squeeze off and determine who can come across the bridge."

Carr argues that in addition to reducing choice, this mega-merger will drive up costs for consumers. However, Cohen says that Comcast consumers pay 92 percent less per megabit than they did a decade ago.

"Prices are not going down and Mr. Cohen has said that himself," says Carr. "If this deal is going to result in such savings and such economies of scale, how about showing the consumer a little sugar? How about we get to dip our beak in too? It puts a lot of market power in the hands of a single provider and the alternatives are, in many instances, far inferior."

Listen to the full interview for more analysis from Carr.