Over at ArsTechnica.com, Jon Brodkin has a fascinating discussion of the regulatory maze that confronts Comcast in its effort to consummate a $45 billion merger with Time Warner Cable:
- Not one but two massive federal agencies have power to block the merger. The Department of Justice will be applying antitrust law, while the Federal Communications Commission exercises its wide powers over content, licenses, and structure in the telecommunications industry. The review is expected to take almost a year.
- The FCC can forbid the merger if it finds that certain license transfers would not be “in the public interest” — whatever that is.
- If the FCC finds there are unknown material facts, it can order hearings to be held. But since that process can last years, it’s known as the “kiss of death” for a proposed merger. Both the Dish/DirecTV merger (2002) and the AT&T/T-Mobile merger (2011) died that way.
- The agencies have wide latitude to define the relevant market for measuring industry concentration. If they decide it’s “multichannel video programming distribution,” then the merger has a better chance of approval. Comcast has already offered (in a preemptive move to appease regulators) to drop three million subscribers, which would shrink its market share below the magic number of 30 percent.
- However, if regulators decide the relevant market is the “triple-play market for video, voice, and Internet service,” that would hurt the chances for merger approval, since market share would exceed 50 percent.
- Back in 2011, Comcast submitted to “net neutrality” provisions in order to get permission for its merger with NBCUniversal. Now those provisions, which expire in 2018, will bind Time Warner Cable as well, if the merger goes through. Also, as a condition for the current merger, regulators could make the concessions permanent.
- Regulators could “include a requirement to offer Internet service with unlimited data, at least in Time Warner Cable territory.”
- The agencies may “seek limits on what Comcast can charge for phone interconnection and use the merger as an opportunity to dive deeper into the peering market” (which involves the contractual connections among Internet companies themselves).
- Comcast “could be required to divest ownership of sports content.”
- Comcast could be required to “make it easier for consumers to buy Internet access without also buying TV programming.”
- Regulators could require Comcast to unbundle its TV channels.
- “Comcast could be forced to buy programming through collective rights associations, the way smaller operators do, putting Comcast on a level playing field with other companies that offer TV channels.”
In America today, two businesses that want to grow through merger are presumed to be bullies who must grovel for permission to impose their products on the marketplace. Here, political hacks who would be hard pressed to communicate with two tin cans and a taut string are dictating business decisions to profit-making companies that deliver a stunning variety of programming to millions of homes using satellites, fiber optics, and other fast-developing technology. By what right do those who produce nothing control those who produce everything?