7/6/2014 12:03:00 PM Media giants take turns going on consolidation buying sprees
Comcast bought NBC Universal and may keep acquiring.
Catholic News Service
WASHINGTON — In the media industry — or, as is the case here, the multimedia industry — the question continues to be asked: How big is too big?
The telecom giants' answers seem to be: Not big enough yet.
Comcast, which bought NBC Universal a few years ago, is already the nation's largest cable TV provider. Earlier this year, it declared its intent to buy Time Warner Cable, the nation's second-largest cable TV provider, for $45 billion.
AT&T, which is thought of primarily as a phone company -- its acronym once stood for American Telephone & Telegraph -- seems to be playing catch-up when it announced it would buy DirecTV, the United States' largest satellite TV operator, for $49 billion.
But what is the interest of the Catholic Church in this?
The church has long maintained that the bigger media giants get, the more likely smaller voices will be muted. These voices can't afford to pay the big fees that the big boys demand for carrying programs on their cable systems. And these voices include religious voices, including that of the church. But other voices not in the mainstream may find themselves on the outside looking in as well.
Comcast has taken an aggressive stance in defending its proposed purchase of Time Warner Cable, saying that the two companies don't compete in any area of the United States.
That is true as far as it goes. Territories across the United States were carved up long ago, as municipalities awarded exclusivity to franchises with the proviso that they accept regulation as a public utility akin to the gas or electric company.
But big players bought out smaller cable companies and then started swapping territories with other major players to gain significant concentrations in metropolitan areas.
AT&T has argued that its U-verse TV service has been a money-loser and that it would gain efficiencies of scale with the DirecTV purchase.
Not that customers' bills would go down, or anything radical like that. Maybe slow the rate of increase, according to AT&T CEO Randall Stephenson, who says AT&T will hold the line on DirecTV costs for three years. Comcast didn't promise any rate reductions when it made its Time Warner Cable bid.
AT&T also maintains that it needs to bulk up to be able to compete effectively with an enlarged Comcast. AT&T had gotten stung four years ago when its planned purchase of T-Mobile was nixed by the federal government over antitrust concerns.
However, each buyer is waving a carrot to federal regulators in hoping their proposed purchases pass muster.
Comcast says it will abide by federal net neutrality regulations through 2018; in short, net neutrality is the concept that all traffic that goes through the Internet is treated equally, which is something the U.S. bishops have long supported. These were the same regulations that were struck down earlier this year by a court.
AT&T promises that, despite the DirecTV price tag, it will save enough money that it will be to bring Internet service to 15 million new households within four years, many of them in rural areas.
Some of those concerns resurfaced June 26 during a Senate committee hearing on the AT&T-DirecTV merger; there was less concern voiced at a House committee hearing the same day.
AT&T is "recycling the claims it has made in attempts to gain approval for several mergers before this one," said Matt Wood, policy director for the Free Press Action Fund, in testimony before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. "AT&T never pauses to explain adequately whether it fulfilled those earlier promises, or if it did, how its new assurances do anything to enlarge its prior commitments."
The combined company will have more power to discriminate against competitors' services -- exactly what strong net neutrality rules prevent, according to John Bergmayer, senior staff attorney for Public Knowledge, another media think tank, in his own testimony before the panel.
Keep in mind the humbler origins of these two behemoths.
AT&T, aka Ma Bell, had its local phone service in 1984 spun off into six regional companies -- the Baby Bells -- as part of a court-ordered breakup of its monopoly. One of those was Southwestern Bell, which later changed its name to SBC. In time, the baby devoured its mother, AT&T, and took on its name.
And Comcast? Cable TV was a diversification move for the Roberts family, which forecast trouble on the horizon for its belt-making business with the introduction of Sansabelt slacks.
So now the issue before the Federal Communications Commission and the Justice Department is whether giants' promises outweigh the lessened competition.