For Immediate Release
Contact: Hillary Crowder, 703-351-2086, [email protected]
Arlington, Va. (March 4, 2015)—The proposed transaction between Comcast and Time Warner Cable (TWC) will increase the intensity of content bundling, allow Comcast to require greater bundling of its programming by other multichannel video programming distributors and result in higher cable prices according to a white paper authored by Vivek Ghosal, an economics professor at the Georgia Institute of Technology.
In the white paper, “The Proposed Acquisition by Comcast of Time Warner Cable: The Purported Benefits Are Illusory, the Potential Harm Substantial,” Ghosal found that since 2012 cable TV prices have increased at more than three times the rate of inflation, due primarily to increasingly larger bundled program packages. Ghosal estimates that approval of the Comcast–TWC transaction would exacerbate that trend.
The impact will perhaps be felt most harshly by rural providers and the customers they serve.
“A markedly greater portion of disposable income is being consumed by cable in the most recent five-year period, and rural residents are likely paying a markedly larger percentage of their income than nonrural residents,” said Ghosal. “Sharply rising bundled cable programming prices help no one, and certainly not the lowest-income segments of the U.S. population—rural Americans. The resulting consumer welfare losses, particularly in rural areas, are likely to be significant.”
Further, the white paper states that if approved, the transaction would raise competitors’ costs, eventually contributing to possible foreclosures and a less competitive marketplace. Additionally, Ghosal wrote that Comcast and TWC could make the same investments and promote innovation without the transaction, therefore undermining their efficiency and consumer benefit claims.
Ghosal is the director of graduate programs in the School of Economics at the Georgia Institute of Technology. He has taught and conducted research on antitrust law and enforcement, regulatory policies and reform, firm strategy and firms’ decisions under uncertainty.
The full text of the white paper is available here.
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