- - Monday, July 14, 2014


Congress loves nothing more than to be seen to be on the side of consumers. So the Senate Committee on Commerce, Science and Transportation on Wednesday will call in representatives of major cable and satellite video services to testify about “consolidation and the future video marketplace.”

It’s a chance for senators to bemoan the high price of cable television and mourn “consolidation,” the buzzword to describe what happens when consumers are free to choose among radio and TV stations. Radio giant Clear Channel was hit by the consolidation complaint a few years ago when liberals realized listeners were overwhelmingly tuning their dial to lively conservative talk radio and ignoring soporific liberal alternatives. (Does anyone remember Air America?) Various consumer interest groups demanded the government intervene and force Clear Channel to sell stations so they could be replaced with “local programming” more suited to liberal taste.

The same forces have returned to insist that combining Comcast and Time Warner Cable would create a cable giant that’s “too big,” though the entertainment market has never been less consolidated than it is now. The bee in the breeches of the liberals is that consumers can choose from hundreds of channels. They want to return to the days when television news was available only from three networks, all reliably liberal.

Government scrutiny of industry mergers is always a boon to politicians, bureaucrats and rent seekers. Both the Department of Justice and the Federal Communications Commission must approve the Comcast merger, so the longer Congress delays approval, the more time for prominent politicians to collect swag from both proponents and opponents. Sen. Al Franken of Minnesota, a Democrat, even set up a petition on his campaign website to drum up opposition to the merger. The names will be used later to prospect for campaign dollars.

Mergers are always opportunities. When USAir and American Airlines merged last year, the Department of Justice insisted that the companies sell landing slots to other airlines before they approved the deal. Electricity regulators have imposed restrictions on deals to reshape the power market and telecommunications company mergers have been held hostage by government officials seeking to block network equipment made in China.

The most troubling part of the game are the third-party rent seekers trying to participate in such deals. For example, when a unionized company merges with a nonunion company, the unions press the government to allow the deal only if the new company is fully unionized.

Corporate mergers are meant to be exercises in free-market efficiency, where duplication is eliminated and consumers benefit. The surviving company is expected to streamline its services. Everything tacked onto the Comcast-Time Warner deal will make cable TV more expensive.



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