WASHINGTON — Both Minnesota senators say they have questions for Comcast and Time Warner before the two media giants are allowed to merge.
The only difference: Amy Klobuchar is taking a look, while Al Franken is taking aim.
When the cable giants come before a Senate committee this month to justify their $45 billion deal, they’ll face an audience of skeptics like Klobuchar, who says she has a series of concerns about the potential merger, and outright critics like Franken, who is working to convince regulators and the public that the merger could be bad for cable and Internet customers.
“I’m concerned that consumers are going to get stuck with higher costs, that this is going to decrease competition, that some people will get less choices, pay more for those choices and get worse service,” Franken said.
Franken most vocal critic
Franken has been perhaps the most vocal congressional critic of the merger. He’s written two letters to regulators warning them of his concerns, and waged a public campaign against the deal through both his official office and his campaign, including a rare national television interview in Februrary.
Franken said his concerns are multi-faceted, that a combination of the country’s two biggest cable companies and the first and third biggest Internet providers could exert too much control over consumers in both areas. A former “Saturday Night Live” star and writer, he said his experience has fueled his concerns over media mergers and their impact on the industry and especially consumers.
“This is a position they have now, and I don’t want to make it worse by going in the wrong direction,” he said.
Judiciary panel will consider merger
Congress doesn’t technically have any power over the merger, except for probing it through committee hearings and what Franken calls “developing a record” for regulators at the FCC and Department of Justice to look at.
Consolidation concerns have sometimes halted mergers (AT&T tried, and failed, to buy T-Mobile in 2011), but the last time Comcast attracted congressional attention, it won out — Franken strongly objected to its purchase of NBC-Universal in 2009, but regulators approved the deal and Comcast now completely owns the network.
The Senate Judiciary Committee, on which both Klobuchar and Franken serve, will hear from Comcast and Time Warner representatives on March 26.
Klobuchar, who chairs the committee’s antitrust panel, said she will have three areas of concerns for the officials: what impact the merger would have on consumers (such as pricing and availability), how it would affect the concept of an open and neutral Internet, and the way content producers would interact with the new corporation.
Klobuchar said she “wants to look at all the evidence” the companies will deliver, but said the merger does raise some concerns just on its face.
“When you have a merger of this magnitude, you have to closely scrutinize it,” she said.
How will it help consumers?
Regulators will likely base their decision on whether Comcast can prove its merger will benefit consumers, said Martyn Griffen, a government affairs associate with the anti-merger consumer rights group Public Knowledge.
In announcing the deal, Comcast called it “pro-consumer,” saying, “more American consumers will benefit from technological innovations, including a superior video experience, higher broadband speeds, and the fastest in-home Wi-Fi. The transaction also will generate significant cost savings and other efficiencies” for customers.
But consumer groups and lawmakers against the merger argue combining the two biggest companies in the industry can only decrease competition within it, which in turn could mean higher prices for consumers. They point to comments from Comcast officials who acknowledge the merger will likely do little to lower costs or even slow down cost increases.
In his initial letter to regulators, Franken said he’s heard from constituents who are already concerned with the high price of cable, and who would consider switching, if not for the fact “a handful of cable providers dominate the market, leaving consumers with little choice but to pay high bills for often unsatisfactory service.”
”One would hope that there still would be a competitive market, but unfortunately, the market’s not competitive right now, and this kind of merger would not make it more competitive,” Griffen said.
But University of Minnesota law professor Dan Gifford said that’s where he sees antitrust arguments against the merger fall apart, noting that there’s already no overlap between cable companies on a local level.
“Almost all cable companies are monopolies on the local market,” said Gifford, the former chair of the Minnesota State Bar Association Section on Antitrust Law. Even with a combined Comcast-Time Warner, there’s already a lack of competition among cable providers for individual buyers.
“I don’t see the antitrust issue,” he said.
A programming ‘monopsony’
Since a merged Comcast-Time Warner would create a company controlling up to 30 percent of the U.S. cable market, regulators will likely ask whether it’s acting as what’s called a “monopsony,” a single dominant buyer interacting with many sellers.
In this case, the sellers are the producers of television shows pitching their content to television providers. A combined Comcast could potentially demand lower prices since it’s the dominant buyer of the content.
“When you have a single entity, it has so much market power, it can control the entire market,” Griffen said.
Klobuchar said the potential impact on content producers hasn’t been as publicized as some of the other parts of this deal. She said lawmakers will look at the “effect the merger could have on the ability of programmers to get their programming out in a fair way.”
Net neutrality conerns
But Comcast-Time Warner wouldn’t just be a dominant cable company: it would have a large portion of the American broadband Internet market as well, which has lead some to worry that it might wield undue influence over how users interact with content online.
Consumer group Free Press, for example, estimates that Comcast-Time Warner would control broadband Internet access for up to 40 percent of the country. Policy director Matt Wood said that’s “getting closer and closer to an outright monopoly on broadband access for big parts of the country.”
Advocates are worried about a litany of ways that degree of influence might affect Internet services, especially the rise of streaming video. Comcast recently cut a deal with Netflix, for example, in which Netflix pays the company for access to its quicker broadband network.
Franken also warned regulators against Comcast’s recent targeting of BitTorrent, a content-sharing platform, and its caps on subscribers’ monthly data usage. Taken altogether, he said, “there’s a whole bunch of issues” for regulators to consider before signing off on the merger.
“Whether it’s technically net neutrality or not, it is,” Franken said. “There’s going to be a fast lane and a slow lane, and you’re going to have to pay to be in the fast lane.”
Devin Henry can be reached at email@example.com. Follow him on Twitter: @dhenry