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Beneficence Is Beside the Point: The Antitrust Realities of the Comcast/Time Warner Cable Merger

While the Comcast/TWC merger is significant in size, it doesn’t give rise to any plausible theory of anticompetitive harm under modern antitrust analysis.

Comcast and TWC don’t compete directly for subscribers in any relevant market; in terms of concentration and horizontal effects, the transaction will neither reduce competition nor restrict consumer choice.

Critics repeatedly assert that the combined entity will gain bargaining leverage against content providers from the merger, resulting in lower content prices to programmers. But after the transaction, Comcast will serve fewer than 30 percent of total MVPD subscribers — a share insufficient to give it market power over sellers of video programming. Moreover, recent exponential growth in OVDs gives content providers even more ways to distribute their programming. Programmers with valuable content have significant bargaining power, and have been able to extract the prices to prove it.

The argument that the merger will increase Comcast’s incentive and ability to impair online video content or other edge providers is similarly without merit. On a national level, the combined firm would have only about 40 percent of broadband customers, at most. This leaves at least 60 percent of customers available to purchase content and support edge providers reaching minimum viable scale, even if Comcast were to attempt to foreclose access.

Some have also argued that because Comcast has a monopoly on access to its customers, transit providers are beholden to it. But edge providers can access Comcast’s network through multiple channels, undermining Comcast’s ability to deny access or degrade service to such providers.

Finally, critics have alleged that the vertically integrated Comcast may withhold its content from MVPDs or OVDs, or deny carriage to unaffiliated programming. But the transaction has no effect on Comcast’s share of national programming, and a trivial effect on its share of national distribution. Comcast already has no ownership interest in the overwhelming majority of content it distributes. This will not measurably change post-transaction.

At the same time, the transaction will bring significant scale efficiencies in a marketplace that requires large, fixed-cost investments in network infrastructure and technology. And bringing a more vertical structure to TWC will likely be beneficial, as well.

Download: Beneficence Is Beside the Point