In shifting marketplace, cable deal may win OK

NEW YORK — On the face of it, the merger of the two largest US cable companies would seem like a nonstarter, given steep regulatory hurdles and skepticism from consumer watchdogs.

But Comcast’s proposed acquisition of Time Warner Cable comes at a moment of seismic change in the television industry, with consumers increasingly cutting their cable cords and instead streaming their favorite shows via the Internet through such services as Netflix, YouTube, Amazon, and Hulu.

That may aid Comcast as it seeks to persuade the government — and deploys a prodigious army of lobbyists — to get its $45 billion deal approved.


“I believe television will change more in the next five years than in the last 50,” Brian L. Roberts, Comcast’s chief executive, has said.

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Still, creating a cable and broadband behemoth serving 30 million customers in 42 states is expected to come under intense scrutiny from the Obama administration, which has toughened its enforcement of federal antitrust laws.

Much of the focus Thursday on how the proposed deal would affect competition overshadowed what could be a more important consideration for regulators: the merger’s effect on broadband Internet service, which is rapidly becoming the most important pipe running into consumers’ homes.

A merged Comcast and Time Warner Cable would have nearly twice as many high-speed Internet subscribers as the next largest company and would control roughly 38 percent of the high-speed Internet market, according to figures compiled by Leichtman Research Group. The new company would account for nearly 32 million broadband customers, versus 16 million for AT&T and 9 million for Verizon.

The effect of the deal on cable TV and Internet service prompted many consumer advocacy organizations to immediately express hostility.


“This industry is notoriously unpopular with consumers due to poor customer service, not to mention ever-increasing bills, and a deal this size doesn’t exactly convince us that things will get better,” said Delara Derakhshani, policy counsel for Consumers Union.

Senator Amy Klobuchar, Democrat of Minnesota, said that because the merger “could have a significant impact on the cable industry and affect consumers across the country,” she plans to convene a hearing.

Comcast dismissed much of the criticism as “hysteria” and said the new company’s market share of cable subscribers will be no higher than it was after completing a similar transaction with Adelphia in 2006.

In addition, Comcast said it and Time Warner Cable do not compete in a single ZIP code.

Nor is the deal likely to affect other providers of television programming — including Verizon, AT&T, DirecTV, and Dish — which in recent years have performed better than the cable companies. Since 2005, Comcast said, telecommunications companies and satellite providers gained 18 million customers while traditional cable companies lost 10 million subscribers.


“Previous antitrust concerns are truly antiquated in light of today’s marketplace realities,” said David L. Cohen, Comcast’s chief lobbyist.

Comcast has plenty of experience dealing with regulators. In 2011, it spent a year persuading the Justice Department and Federal Communications Commission to approve its takeover of NBCUniversal — in part by agreeing to conditions, among them a promise not to use NBC’s clout as a provider of programming to deny access to its customers by competing producers.