Wednesday, September 24, 2014
Comcast & TWC Merger
As you all may have heard the buzz since February, Comcast and Time Warner Cable are aggressively pursing a merger in which Comcast would acquire TWC, effectively making Comcast the largest provider of both pay-tv and broadband internet services. The merger has to be approved by the Federal Communications Commission and the Department of Justice.
The DOJ commonly uses the Herfindahl-Hirschman Index where 1500-2500 points indicates a moderately concentrated market, while above 2500 index points indicates a highly concentrated market. Early estimates indicate the merger would push the pay-tv service market from 1,815 to 2,454 points (24.54% market share), and the broadband internet from 1,455 to 2,130 points (21.30% market share). Furthermore, the FCC Chairman has recently argued that the broadband internet market is not competitive. Last, a few large businesses have issued conditional support to the merger, however, Comcast is playing hardball against these companies, and has staunchly responded to their critics.
Do you think this merger would allow for Comcast to monopolize?
Would this merger bring about a positive or negative outcome for us as consumers?
Article:
Also, I admittedly found the merger HHI estimates on wikipedia so I'm slightly skeptical, however, they don't seem too far off.
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Ooh man that is a close call, as they are only a few points away from being in the "highly concentrated market" category. Who would be their largest competitor in the Pay-TV market? Dish? DirecTV? I definitely don't think that we can say that Comcast is at monopolistic levels yet, especially because we haven't even seen the merger play out. But we may be in a situation, if there are only a few large firms, that there is an opportunity to collude and fix prices. I do think that the internet situation is a bit more dire, especially because I believe that internet is probably the future of TV (live streaming instead of cable.) So I would be more interested in Comcast's market share for internet. Do you think prices are artificially high for internet or TV? It's hard to objectively tell... What if Comcast is able to bridge the two markets and make TV and internet compatible in one system? Would we be in trouble then?
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