Can DISH Network Stop the Comcast-Time Warner Cable Merger?

By Markets Fool.com

Continue Reading Below

Source: Stop Mega Comcast.

Politics (and, apparently, Comcast bashing) makes strange bedfellows: After working behind the scenes for months, labor unions and consumer advocacy groups that typically cater to left-leaning constituencies have joined with conservative Glenn Beck's The Blaze and the Parents Television Council inStop Mega Comcastto oppose the cable company's planned merger withTime Warner Cable. The coalitionincludes a host of organizations that have expressed concern over the merger, along with members of Congress from both sides of the aisle.

Interestingly, the coalition's manifesto focuses on broadband, rather than pay TV, to argue against the merger:

Mega Comcast will have unprecedented power over broadband, controlling 50% of the residential high-speed access points across the country. This unprecedented market power will position Mega Comcast as the gatekeeper to half our nation's broadband homes and also telecom markets such as local cable advertising, programming and pay TV, Latino, as well critical information gateways such as set-top boxes and streaming devices.

Broadband could be a game changer
Until now, the emphasis of those opposing the merger centered on pay TV.Unfortunately for merger foes, Comcast and Time Warner Cable had a rather strong rebuttal considering that they don't compete against each other in the vast majority of U.S. pay-TV markets.

Continue Reading Below

Meanwhile, companies such asDISH Network, DIRECTV, and Verizon, have entered the space, pushing the combined entity's market share to roughly one-third of the U.S. pay-TV market. DISH has joined the Stop Mega Comcast coalition, presumably due to fears a combined Comcast- Time Warner Cable would have to market share to better negotiate channel content fees to the detriment of other pay-TV providers. DISH's involvement here is interesting, though,considering the group's emphasis appears to be on broadband Internet -- a business that provided less than 2% of the company's revenue in the last fiscal year.

Comcast pushed back against the coalition in a statement from company Vice President of Government CommunicationsSena Fitzmaurice:

Hundreds of community organizations, programmers, lawmakers and diversity groups have praised the pro-consumer benefits of this transaction. It is no secret that some companies that want billions of dollars in higher fees for consumers are paying lobbying firms to organize against this transaction. ... This minority of self-interested opponents has used the same tactics in our past deals, and their claims were not found to be credible by the expert agencies. We believe the same will be true here.

Could this foreshadow the net neutrality decision?
Comcast disputes the coalition's assertion that the merged company's broadband market share would approach 50%, putting the number instead at 35%. Either way, the broadband issue could be a stronger argument against the merger than the pay-TV case for the Federal Communications Commission and serve as a proxy battle in the bigger net neutrality argument.

Recently, President Barack Obama came out in favor of FCC Title II, perhaps the strongest tool the Federal Government has to guarantee Net Neutrality; FCC Commissioner Tom Wheeler also said Title II is "on the table," but has pushed back the vote on open Internet rules to 2015.

If the FCC rules on the Comcast-Time Warner Cable merger before deciding on Net Neutrality, it could signal its intentions on that contentious issue. By voting to allow the merger, the FCC potentially signals it will come down on the side of corporations and perhaps adopt toothless Net Neutrality rules. If the commission denies the merger, it could signal a pro-consumer stance that favors strong Net Neutrality rulemaking.

The article Can DISH Network Stop the Comcast-Time Warner Cable Merger? originally appeared on Fool.com.

Jamal Carnetteowns shares of Verizon Communications. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.