Wednesday, April 22, 2015

Democracy as an Anti-Trust Criterion: The Comcast Time-Warner Merger

As the U.S. Department of Justice and the SEC were reviewing the proposed merger between Comcast and Time Warner in April 2015, six U.S. senators signed a joint letter opposing the $45 billion deal. Comcast would control about 30 percent of the pay-television subscribers in the U.S. and an estimated 35 to 50 percent of the American broadband internet service.[1] That more senators had not signed on is telling with respect to how business-oriented American society had become.

At the time, the Justice Department was investigating whether the takeover would harm competition, while the Federal Communications Commission was evaluating whether the combined company would be in the public interest. For their part, the senators wrote that the combined company’s “unmatched power” would reduce competition and hamper innovation, as well as lead to higher prices, fewer choices, and worse service.[2] Opponents more generally “portrayed Comcast’s effort as a land grab that would give the company too much leverage in the industry.”[3] In short, one company would have too much power over the future of television and broadband. What about over Congress? The silence alone on this question is telling.

Beyond the industry-level impacts, which would admittedly be quite significant, the plutocric ramifications are also striking. That is, the giant company would have so much financial muscle that its forays into campaign finance would likely have an anti-democratic impact. Members of Congress, for example, would be subject to greater temptations to do Comcast’s bidding at the expense of their respective constituents (and states). As recipients of political-campaign donations, elected representatives have an incentive to look the other way as a large corporation gets even bigger.

In 2008, for example, the largest single contributor to Barak Obama’s presidential campaign was Goldman Sachs. The $1 million contribution helped insure that the White House under Obama would not come down too hard on the bank (or Wall Street). Interestingly, the Dodd-Frank Financial Reform Act of 2010 does not give the federal government the authority to break up banks that are too big to fail. Similarly, a “super Comcast” would insulate itself in Congress against populist attempts to break up the company in order to bring more competition to the television and internet industries. I submit that anti-trust law ought to be strengthened to include the protection of representative democracy from encroachments from large concentrations of privately-held capital (i.e., large corporations).

[1] Emily Steel, “6 Senators Urge Rejection of Comcast-Time Warner Cable Deal,” The New York Times, April 21, 2015.
[2] Ibid.
[3] Emily Steel et al., “Comcast Is Said to Abandon Bid for Major Rival,” The New York Times, April 24, 2015.