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Comcast-TWC: A Legal Case

An edited excerpt from Christopher Yoo, law professor, University of Pennsylvania, at an April 9 Senate Judiciary Committee hearing on the Comcast-Time Warner Cable merger.

I would like to use my brief time at today’s hearing to make two brief points.

First, with respect to the distribution of traditional television networks such as ESPN, Nickelodeon, and the Disney Channel, established principles of antitrust and communications law indicate that the merger is unlikely to harm consumers. The lack of any overlap in the areas served by Comcast and Time Warner Cable means that the merger should not affect the prices that subscribers pay for cable television subscriptions. In short, consumers would have the same number of choices of multichannel video providers the day after the merger that they did the day before.

Two major court decisions, in 2001 and 2009, also rejected arguments that companies that controlled only 30% of nationwide cable subscribers could inflict anticompetitive harm on cable networks. In light of the merging parties’ commitment to reduce their holdings so that they control no more than 30% of the national market, these court decisions represent a potentially insuperable obstacle to claims that allowing the transaction to proceed would adversely affect this market.

Moreover, those court decisions were issued in a different era, when the multichannel video market was much less competitive. Since 2009, the costs of program acquisition have risen substantially faster than cable rates, as program providers have driven increasingly tough bargains. At the same time, the number of options for video distribution has continued to increase, as Verizon’s FiOS and AT&T’s U-verse networks have expanded their customer bases and Internet- based systems such as Netflix, Amazon, Hulu, Google, Roku, and Apple have emerged as important video platforms.

The industry is thus not structured in a way that would make anticompetitive harm in the market for video programming likely. Any residual concerns may be addressed by the extensive program-carriage and access rules that the FCC has developed to ensure that the entire industry has sufficient access to video content and distribution. The regulatory agencies have repeatedly recognized that such problems are better handled through general rules applicable to the all industry players than through one-off conditions that bind only the merging parties.

Second, with respect to broadband Internet access, the lack of any overlap in the areas served by Comcast and Time Warner Cable again makes it unlikely that the merger would affect the prices that subscribers pay for Internet access. In addition, the structure of the market for Internet access makes anticompetitive harms even less likely in broadband Internet access than in cable television.