The proposed merger between Time Inc. and Warner Communications Inc. would “exacerbate the lack of competition” in pay television and could be “a harmful blow to program diversity,” operators of television services that use satellites and satellite dishes told a House panel Tuesday.
Testifying before a House Judiciary subcommittee, Robert L. Schmidt, president of the Wireless Cable Assn., said companies providing an alternative to traditional cable television are being “kept out of the market” and that the proposed merger would make things worse.
“I don’t think the consumer will see the benefits” of the merger, Schmidt said. “I don’t believe the consumers will have a choice.”
Executives of the two companies testified before Schmidt spoke, rejecting the charge that the merger would impair competition and stressing that combining their assets will allow them to fare better against foreign competitors.
“American consumers will benefit enormously from our activities abroad,” said Steven J. Ross, Warner’s chairman. “What the consumer wants is what we are going to give them.”
Critics contend that the merger of Time’s cable channel, Home Box Office, with Warner’s movie library and the extensive cable operations now owned by both firms could have anti-competitive consequences. Time provides cable service to about 8% of the nation’s subscribers and Warner about 3%. Any merger, the critics say, should be accompanied by a divestiture of some of these operations.
George Garvey, a law professor at Catholic University, warned that the Time-Warner merger also could “drive the entire media and entertainment industry into a merger frenzy.” He said ownership of the media industry by a few large companies would threaten the independence of the industry, which he said thrives on diversity.
“The American economy must stop reshuffling and start rebuilding,” he said.
But Ross said the merger is necessary if the two companies are to compete effectively in the face of foreign-owned media giants.
The Justice Department and the Federal Trade Commission can stop a merger if they decide it violates federal antitrust laws. The Time-Warner merger would create one of the largest media conglomerates in the world.
J. Richard Munro, chairman of Time, said he expects “no problems” from the federal government and added that lawmakers at the hearing seemed “very supportive” of the merger.