Comcast & Time Warner Cable Merger

Time Warner Cable's acceptance of a $45 Billion offer from Comcast is a potential merger between the top two cable companies in the United States in terms of total subscribers. If the transaction passes shareholder approval and avoids antitrust hiccups, the new combined company, under which Time Warner shareholders would own about 23% of Comcast, would be able to reach nearly 70% of the U.S. population. In theory, this merger could potentially be lucrative for consumers. This is due to the fact that with even more bargaining power, the new Comcast could then negotiate better deals with content producers. Unfortunately, this one sliver of possible upside from the deal is probably not enough to bring costs down for consumers. This idea is reinforced by analysts who believe that costs will continue to rise for consumers either way. As television and internet providers like Comcast continue to lose subscribers from their television business due to a plethora of other options like Netflix, Hulu Plus, illegal streaming online, and many others, they are forced to charge more to the remaining television subscribers while hiking rates for internet only plans. In addition, content costs will probably continue to rise as advertisers continue to look to join content which guarantees live viewership instead of simply allowing consumers to record and then forward through commercials. The one type of programming that meets these criteria is sports programming, as it is one thing that consumers continue to watch live. Unfortunately, most of the major sports leagues have just had or will shortly have their TV rights up for renewal, which means bidding wars for content and higher prices for consumers.

Personally, I believe that television programming costs are bound to continue rising in the next few years with or without the Comcast & Time Warner Cable merger. Though the move will definitely garner some antitrust rumblings, it will probably pass muster and go through in the near future creating a true behemoth. Hopefully, this new company can leverage its scale and be a glimmer of hope for lower costs moving forward.

-Varun Sawhney