Friday, February 14, 2014

Liberals, Conservatives Wary of Time Warner and Comcast Merger

What could bring conservatives and liberal-leftists to, if not arm in arm cooperation, at least shouting distance agreement?  The impending merger between Time Warner and Comcast, the cable company currently ruling the NBC empire of networks.

Media Research Center's Newsbusters, a conservative media watchdog site, sounded the tocsin this week.  It warned readers that the combination of two cable giants could bring competitive benefit to Comcast's prize NBC products.  These would wield "even more influence."

Senator Al Franken, a former media figure in the employee of NBC during his years on Saturday Night Live, wrote to the Department of Justice, Federal Trade Commission, and Federal Communications Commission. Franken related his "serious reservations" about the merger.  He went on to say " Unfortunately, a handful of cable companies dominate the market, leaving customers with little choice but to pay high bills for often unsatisfactory service."

Gizmodo related larger concerns.  With cable dwindling, the size of the new conglomerate could control broadband access, since internet relies on the same wiring to get into the house.  In the short term, a near monopoly in the cable market (Gizmodo compared it to Coca Cola buying Pepsi-Cola) could enforce bad deals on not only cable channels like The Weather Channel, but also the major networks.  Fearing loss of market when television viewership as a whole is down, networks and channels could possibly be bent to the will of the new company much more easily.

Or this could be another case of Time Warner hitching itself to a fading star.

Back in what seems like a generation ago, there was once a company called AOL Time Warner.  Time Warner endeavored to combine with the most prominent name in internet providers, raising fears of media monopoly.  No one could speculate the impact of a single company across a spectrum of media.  Certainly almost no one guessed that AOL was on the verge not of omnipotence, but irrelevance. 

History may not repeat itself exactly in this case.  But the history of monopolies in a free market shows a pattern.  Monopolies, unless backed by government favor or power as in the example of the 1770s British East India company, are inherently unstable.  They act sluggishly, only innovate slowly, and usually either shrink or break apart due to pressures from competition.  

Monopolies rely on what worked in the past while ignoring the future.  IBM was fated to lose technological dominance the day it ignored Bill Gates.  Comcast's dominance of cable may be akin to a hypothetical carriage monopoly in 1900.  They may win today and be a footnote tomorrow.  

Advances in technology are the biggest enemy of monopoly and market dominance.  Giant companies fear the change that smaller companies embrace and drive. The many technological alternatives to cable render fears of a monopoly moot.  AT&T once dominated the long distance telephone market.  Had Congress not broken AT&T up in the 1980s, the internet and cell phones would have undermined their market control. Time Warner itself struggles to figure out how to make sure profits on some of its traditional holdings.  

After all, in the 21st century, Bleacher Report is worth more than the Washington Post.  It's a new day.

Conservatives worry about the possible outsized influence on media and politics of their MSNBC nemesis.  Liberals and leftists fear the old bogeyman of monopoly, this time in media form.  At the end of the day, even if this merger goes through, history shows that there will be sound and fury.  But market mechanics remain.  Consumers will demand to be satisfied, or they will turn to satellite television, the internet, or some other source even more than they do now.

In the cable TV market, the cable companies do not rule the consumer.  Increasingly, they will face the fact that they must serve the market or disappear.

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