The two largest cable providers are about to get bigger. The announcement came Thursday April 22, 2005, Comcast and Time Warner Cable have teamed up to buy Adelphia’s bankrupt cable systems across the country. Although the purchase must be approved by regulators, an April 22 BusinessWeek article says, "[w]hile the deal is not expected to face major regulatory hurdles, it further consolidates the power of the top two companies, enabling them to move more quickly to expand into lucrative new businesses such as telephone service, high-speed data transmission, video on demand and digital video recorders.
Craig Moffett, an analyst with Sanford C. Bernstein in New York, said the deal would 'create an ever more stark difference between the haves and the have-nots' in the cable industry."
The exact details of the deal are not clear, media reports indicate that Comcast and Time Warner will split the Adelphia systems – giving the networks and subscribers in some areas to Time Warner and others to Comcast. Rather than competing with each other, each company will grab the systems in areas where they already have a substantial presence.
Consumer advocates have long been concerned with cable companies dominating programming options for consumers. Research shows only two percent of all Americans have more than one cable company to choose from, but those lucky few are paying 10 to 20 percent less than the rest of us who subscribe to cable.
Cable companies argue that rates are increasing due to the rising cost of programming. But it is the cable operators that require consumers to buy tiers of programming that include a large number of channels consumers do not want. The bigger the cable or satellite company, the more influence they have over programming. Companies like Comcast are only introducing new channels they have an ownership stake in.
In 1992, Congress forced the Federal Communications Commission to develop rules capping the national market share a cable operator could have, because they feared large cable companies would have too much control over consumers and independent programmers. Comcast is currently near the 30% threshold developed years ago, and a purchase of Adelphia will almost certainly put them over that limit – the problem is that the limit doesn’t exist in law anymore. Those rules have not been re-written after a federal court threw out the Commission’s first attempt.
To read more about cable rates, channel choice and diverse programming see What’s At Stake: TV, Radio and Cable.
