Can we block a merger just because the two companies involved are jerks?
I bet you know which merger I’m thinking of: the one where America’s most hated company wants to join forces with America’s second-most hated company (Time Warner Cable and Comcast, in no particular order).
Don’t just take my word for it, though I did have to reset my Comcast modem
three four times while writing this column. Consumers are more likely to swear while on the phone with their TV provider than with almost any other company they call, according to an analysis of 1.2 million customer call recordings conducted by Marchex. And in pretty much every ranking of customer service, satisfaction or reputation, Comcast and Time Warner Cable clock in at last place or very close to it.
The American Customer Satisfaction Index, for example, tracks opinions of hundreds of companies. In 2013, the only company that customers hated more than these two — across all industries, mind you — was the Long Island Power Authority. (And it would have been hard to surpass the power authority in repugnance, given that it left thousands of New Yorkers without electricity for weeks after Hurricane Sandy and then sent them bills anyway.)
Consumer Reports National Research Center’s annual telecommunications service survey, MSN Money-Zogby Analytics’ Customer Service Hall of Shame and YouGov’s BrandIndex likewise all effectively flunk Comcast and Time Warner Cable.
When I’ve asked Comcast representatives about these abysmal ratings, they say they’ve invested millions in improving the “customer experience” through shorter appointment windows or a more functional TV menu interface. Comcast representatives also repeatedly tout another survey, from J.D. Power & Associates, that supposedly documented Comcast’s improvement. But look at J.D. Power’s “overall satisfaction” and “customer service” ratings, and you’ll find that, for both residential Internet and television services, both Comcast/Xfinity and Time Warner Cable scored either the lowest grade possible or, at best, were deemed “about average.” (Note also that J.D. Power seems to be the laxest grader out there; it scores companies on a scale of one to five, with five being the best, but acknowledges that it never actually assigns a rating below two.)
If you think profanities are abundant on Comcast and Time Warner’s customer service calls, check out the expletive excess on Yelp, Facebook and other social media. In the immortal words of the actor and Twitter celebrity Patrick Stewart: “All I wanted to do was set up a new account with @TWCable_NYC but 36hrs later I’ve lost the will to live.”
All signs point to the fact that cable companies, and especially these particular cable companies, are among the worst firms Americans deal with, at least in part because local monopolies have no incentive to treat their customers humanely. How, then, could increasing their market power possibly be good for consumers?
Consumer watchdog groups are certain that it would not be.
“When you put two bad companies together, they don’t remain equally bad. They get worse,” said Harold Feld of Public Knowledge, a consumer advocacy group. “And there’s a multiplier effect. Instead of just bad plus bad, you get badness squared.”
Okay, I realize regulators usually block mergers for antitrust reasons, not for demonstrable contempt for consumers. But there are indeed reasons to be concerned about the anti-competitive consequences of a Comcast-Time Warner merger, even though the firms keep emphasizing that they compete for few households . For example, Comcast owns NBCUniversal; with a bigger footprint, Comcast might have a greater incentive to charge competitors such as DirecTV more for NBC programming in order to raise rivals’ costs and thereby drive more consumers to Comcast. Or the newly combined company might use its greater bargaining power to keep out, or at least extract more money from, companies that offer competing video-on-demand services that rely on Comcast for delivery (such as Netflix).
Time Warner and Comcast, of course, argue that their marriage would be unambiguously “pro-consumer” and would “generate significant cost savings and other efficiencies.” But they have also effectively acknowledged that those alleged efficiencies wouldn’t be passed on to consumers. During a conference call shortly after the merger announcement, a Comcast executive told reporters, “We’re certainly not promising that customer bills are going to go down or even increase less rapidly.”
This should be enough to concern the antitrust regulators at the Justice Department. But remember that the Federal Communications Commission, which must also approve the merger, has a broader mission beyond just trust-busting: Regulators there are supposed to judge whether mergers are “in the public interest” before waving one through (or at least imposing conditions on it). Traditionally “public interest” has included factors including competition, localism and diversity. Perhaps a solid record of screwing over millions of customers should be a consideration, too.