To paraphrase Douglas Adams in "Hitchhiker's Guide to the Galaxy", Comcast "is big. Really big. You just won't believe how vastly, hugely,
mind-bogglingly big it is. I mean, you may think it's a long way down
the road to the chemist's, but that's just peanuts to Comcast." With the announcement last week of Comcast's proposed merger with Time Warner Cable, Comcast becomes even more "mind-bogglingly big". How did we get here?
In 1983, 90% of American media was owned by 50 companies. By 2011, that number shrunk to 6. (
The Big 6 ), Comcast
, Walt Disney, Viacom,
CBS, News Corp and Time Warner Inc. 6 companies that control at least 90% of our media. Comcast's merger with NBC last year means it controls 1 of every 5 hours of television (
Article ). In 2010, the combined income of the Big 6 was estimated to be $275 BILLION, or $36 billion more than Finland's GDP. Last year Comcast reported $6.8 billion in profit on $64.7 billion in revenue. (
NY Times History of Comcast ) If that isn't scary enough, the new Comcast/Time Warner Cable merger "would put more than a third of all cable-TV subscribers in
Comcast’s hands and give it control over more than half of the
“triple-play” services that combine TV, phone and Internet service."( freepress.net)
Is this consolidation of power good for us, the consumer? Many say "NO". There have already been arguments between cable systems and content providers, the largest one so far between CBS and Time Warner Cable. CBS won the battle because subscribers didn't want to lose CBS from their channel list. Comcast has pledged to divest 3 of the 11 million subscribers it gains from Time Warner, keeping it at the 30 million subscriber level. According to some estimates, that gives Comcast at least 1/3 of all cable subscribers, and with the decline in cable subscribers, that number may be closer to 50%. Even with the subscriber decline, cable providers have still seen a 5% income growth thanks to the continuing increase of fees. With a bigger Comcast, do you think there will be a reduction of fees anytime soon? Repeat after me "the rich get rich while..." Forbes reported in an
article at the end of 2013 that "Nationwide, the average pay TV bill (excluding internet and phone
service) was $86 in 2011 and is expected to reach $123 by 2015, based on
estimates by the NPD Group.
With consumer income and spending remaining relatively flat, industry
analysts agree that the current business model is not sustainable in the
long term. Yet despite widespread customer complaints over price hikes
and channel bundling, the cable industry still manages to hold on to a
nationwide customer base of about 56 million video subscribers, more
than their satellite (34 million subscribers) and telco (10 million
subscribers) rivals combined, according to a recent report from SNL
Kagan." The FCC reports that customer rates have been increasing by about 6% annually – the current
inflation rate, by comparison is 1.5% And speaking of those "customer complaints", Comcast and Time Warner are on the bottom of the
American Consumer Satisfaction Index.
Finally, how much influence does the consumer have? The media information graphic I referenced earlier points out that 232 media executives control the "information diet of 277 million Americans". That's 1 media executive to 850,000 subscribers. That's a lot of power. Is there anyone else looking out for us? How about the FCC? The new head of the FCC is Thomas Wheeler, a former top lobbyist for the wireless and cable industries.
From 1979 to 1984, he served as president of the National Cable
Television Association and before that he was CEO of the Cellular
Telecommunications & Internet Association. Given those credentials, where would you guess his loyalties are? The only thing we consumers can do is make our voices heard. It worked for CBS against Time Warner Cable, but not for the Weather Channel in it's fight with Direct TV.
Freepress.net has an online petition to the FCC and the Justice Department. You can also contact your
Congress member and let them know how you feel about the merger. In the meantime, enjoy your cable and Netflix programming before the prices go up...again.
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