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Cable television

Comcast's $44.3 Billion Merger with MediaOne: Will Valley Viewers Face Higher Cable TV Rates?

Strategic Insights

— 2 min read

Comcast Corporation's planned acquisition of MediaOne Group Inc. has raised concerns among consumers in the Central Valley about potential rate increases. Despite MediaOne's assurance that business will operate as usual, a consumer advocacy group warns that the merger could lead to higher prices due to the concentration of market share among three major companies. The merger, valued at $44.3 billion in stock, would create the nation's third-largest cable TV company with 11 million customers.

Key Takeaways:

  • The merged company, Comcast MediaOne, would have a potential market of over 18 million homes in 33 states.
  • MediaOne has about 150,000 cable TV subscribers in the Fresno area, and officials have stated that nothing has been discussed about rate increases.
  • Consumer Action, a San Francisco-based advocacy group, warns that the concentration of market share among three major companies could lead to higher prices and reduced bargaining power for consumers.
  • The merger would create a company with significant market presence, including a 57% stake in QVC, a 69% stake in E! Entertainment, and ownership of over 15 million Class-A shares in At Home Network.
  • The cable industry has a history of raising rates despite promises to consumers, as seen in the Congress' threat to step in last summer due to inflationary rate increases.
  • City Council Member Garry Bredefeld is concerned about the merger's potential impact on consumers and plans to seek advice from the City Attorney's Office to protect citizens from rate increases.
  • Comcast has announced plans to sell its cellular telephone operations to SBC Communications, parent company of Pacific Bell, for $1.7 billion.

Statistics:

  • The merger would create the nation's third-largest cable TV company with 11 million customers.
  • Comcast MediaOne would have a potential market reach of over 18 million homes in 33 states.
  • MediaOne has about 150,000 cable TV subscribers in the Fresno area.
  • The merged company would own about 57% of QVC, a 69% stake in E! Entertainment, and over 15 million Class-A shares in At Home Network.
  • Comcast's 1998 revenue was $5.15 billion, while MediaOne's 1998 revenue was $2.88 billion.

Sources:

  • "Comcast Explores Sale of Cellular Operations," [byline not available], The Fresno Bee (undated)
  • "Comcast, MediaOne to Merge in $44 Billion Deal," [byline not available], The Wall Street Journal (undated)
  • "Comcast and MediaOne Combine to Create Third-Largest Cable Company," Associated Press (undated)
  • "Comcast's $44 Billion Deal for MediaOne," [byline not available], Bloomberg News (undated)

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