Comcast's Enemy May Be Comcast

[Commentary] Comcast and Time Warner emerged pretty much unscathed from their encounter with the Senate Judiciary Committee. And why not? Even senators get the basic argument. In their cable TV businesses, their merger wouldn't reduce competition because the duo already don't compete against each other, even as they compete with a growing array of third parties, including satellite everywhere, telephone companies in numerous markets, and Netflix and other "over the top" providers wherever customers have access to decent broadband. In their broadband business, they also don't compete with each other, even if consumers and politicians might wish for more competition generally.

The case against the merger (which nobody made) comes from positing some fairly complex and speculative anticompetitive synergies. Because the new company would be such a big player in the cable TV business, dominating the crucial New York and L.A. markets, it might be able to bully programmers into denying over-the-top competitors must-have content, especially sports, needed to deliver a true cable replacement. A superficial plausibility attaches to these fears because they roughly accord with the dreams of Comcast chieftain Brian Roberts, the most ambitious of the cable guys when it comes to remaking the cable entertainment bundle for the digital age and avoiding Steve Jobs's advice for cable operators to embrace a role as mere "dumb pipes" for other people's content. The merger wasn’t savaged by the Judiciary Committee because of Comcast's willingness to concede "behavioral remedies" upfront, delighting regulators by giving them continuing powers they could never get through the courts or Congress. Comcast and Time Warner should be free to merge if their shareholders so desire, given a lack of demonstrable antitrust harms. Whether their vision of a cable-cum-everything conglomerate in an age of digital unbundling makes sense might be a harder question for investors.