Step 1 in Getting a Cable Merger Approved…Don’t Upset the Little “Guy”

Apparently, a necessary (and maybe sufficient) condition in getting regulators to approve a cable system merger is to have an agreement by the MVPD to carry RFD-TV.  Charter just renewed its agreement to carry RFD-TV.  The rural channel and its parent, Rural Media Group, now support the Charter-Time Warner-Brighthouse merger.   AT&T agreed to carry the channel on its U-verse systems after announcing its plans to merge with DirecTV.  The deal closed this summer. 

Comcast wasn’t so easy to “win over”.  Comcast dropped the channel in some of its urban/suburban markets because of low viewership numbers.  Because of its concerns that the industry’s consolidation trend ignored the interests (and viewing preferences) of rural Americans, RFD-TV asked the FCC to impose rural carriage conditions if it approved Comcast’s merger with Time Warner Cable.  Comcast didn’t acquiesce.  The merger didn’t happen.  

Another Merger....Everyone Knows the Drill

A few months after regulators approved its $48.5M merger with DirecTV, AT&T, in an October 13^th letter to the FCC, raise concerns that the Charter-Time Warner (and Bright House) merger would harm competitors and consumers.  They claim that cable firms, who choose not to compete head-to-head in local markets (see map), will find it easier to coordinate national activities, namely sharing affiliated programming with each other and raising costs to non-cable rivals.*  AT&T claims that:

“Cable companies share common, national rivals in broadband, video, and telecommunications services.   These geographically segregated cable companies therefore have incentives to coordinate their activities to fend off these common rivals and have demonstrated the ability to do so.”

Dish also petitioned the FCC on Tuesday to deny the merger claiming that similar to the Comcast-Time Warner merger, the larger operator could harm online video services (e.g. Sling).

Publicly opposing the merger is what the satellite providers have to do.  (In hindsight, Verizon should have been on record opposing the 2011 AT&T-T-Mobile.)  A more concentrated market helps the remaining competitors.  In the months/years ahead, expect more consolidated in the saturated pay TV/broadband market.  And, expect more weak statements of opposition from competitors.

*While AT&T is now the largest paid TV provider with 26M subscribers, its 5M broadband subscribers is much smaller than the 20M+ subscribers each for Comcast and a combined Charter-TW-Bright House.

Streaming Your Way: The Disutility of Too Many Choices

From the beginning of cable time, we have been “offered” a limited number of programming packages.  And, for most of us, regardless of what package we selected, we were getting channels we didn’t watch.  For decades, we clamored for the ability to select the channels we wanted to watch even when warned by the cable operators that it would cost us more money.  

Fast forward to 2015.  We now have an expanding array of skinny bundles from video distributors/program outlets.  (An incomplete list is below.)   If this is the transition to the new normal of selecting and paying for all channels on demand, I’m not sure we will be better off.  And, it’s not just about the money it’s going to cost us.  It’s about what Barry Schwartz calls the “paralysis of choice”.  (See link to his Ted talk below.)  With so much to choose from, will we become overwhelmed and increasingly dissatisfied?  What is the right number and variety of programming that would make us feel better off?  Does it exist?  Or, are we destined to be unhappy because we long for the good ole days when TV (with a handful of broadcast channels) was free.  

Barry Schwartz's Ted Talk

Firm	Genre	Monthly Price
NBC Comcast (Seeso)	Comedy	$3.99
CBS (All Access)	Multi	$5.99
Time Warner	HBO Programming	$14.99
Dish (Sling)	Multi	$20 (includes ESPN, CNN)
Hulu (ABC, NBC, the CW, FOX)	Multi	$7.99 (with ads) $11.99 (w/o ads)
Netflix	Multi	$9.99
Amazon Prime	Multi	$99 per year