Comcast’s attempt to buy Time Warner Cable for $45 billion will be bad for everybody except the company’s top executives, shareholders and Wall Street dealmakers. If this isn’t a monopoly that should be stopped, what is?
The trouble: The Obama administration’s behavior in the U.S. Airways-American Airlines merger shows that it can be rolled. The Justice Department initially made moves to block the anti-competitive, anti-consumer, job-killing deal, then stepped aside. Theodore Roosevelt is still spinning while the shades of the toffs behind the Northern Securities railroad monopoly are wishing they could have lived today.
On the other hand, the department’s lawsuit seeking to stop AT&T’s takeover of Bellevue-based T-Mobile might offer some hope. AT&T walked away from the deal.
One of Comcast’s early gambits is a promise to shed 3 million subscribers. This is a tiny fraction of what it would gain from the deal: Nearly one-third of the total subscribers in the country. A bigger concern is that Comcast would gain even more power over content providers and have even fewer incentives to serve customers or improve broadband service that is abysmal compared with most other advanced nations.
The content issue cuts deeper than paying more to see Honey Boo-Boo. Communications monopolies leverage content on the public airwaves for their private gain and are increasingly in the driver’s seat. It is part of the national consolidation of the media that has damaged and denuded local news coverage and, ultimately, democracy.
Also, these giant cable outfits enjoy monopolies locally already and aren’t afraid to use the monopolist’s rough tactics. Comcast pretty much owns Seattle and worked hard to defeat former Mayor Mike McGinn for the temerity to suggest that the city needed better, independent broadband. Mayor Ed Murray has blogged against the merger.
To be sure, some monopolies, oligopolies and duopolies have been very good to Seattle: Microsoft, Amazon and Boeing. At the risk of being an apologist, I would call Microsoft’s monopoly one of genius (and Bill Gates’ competitive fury, to be sure), not buying up market share and shutting down options. At the height of Microsoft’s power, I owned a Mac. In any event, the power was fleeting and was contested by the federal government.
But for the economy as a whole, heavy consolidation has played a major role in killing jobs, keeping out new entrants to the market and holding back innovation. This drag is even more pronounced in the lesser depression we are enduring.
And, sure, in theory monopolies eventually commit suicide. But it can take decades. In the meantime, customers and communities and the national economy suffer. That’s one big reason why antitrust legislation began in this country.
What will the former elite corporate lawyer, Attorney General Eric Holder do? And will he make it stick?
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Today’s Econ Haiku:
Borrowing is up
Too bad most wages are not
Debt and gravity