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Rothbard On The Comcast and Time Warner Merger

The media response to the news of the pending merger between cable giants Comcast and Time Warner has been mostly negative. The two cable and broadband suppliers currently operate in different markets, but this didn’t stop pundits from proclaiming a rise in pricing would result due to decreased competition.

Once the forty-five Billion dollar deal gains the seal of approval from the federal government the combined Comcast and Time Warner entity is expected to have about 30 million subscribers. The merger will give the entity access to 70% of U.S. households. Access to households is only one part of the equation. The other part is convincing customers to buy your products. Time Warner and Comcast have been struggling peddling one of their products in recent years. They have been selling pay-TV packages to fewer and fewer households over the past few years.

The entity that is formed at the completion of the merger will remain beholden to the laws of supply and demand as they strive to set a price that achieves market equilibrium. Murray Rothbard describes below, in an excerpt from Man, Economy, and State, how the number of firms or disagreements between firms in a given industry does not drive price. Rather the desire to make a profit by providing a service to customers drives the price.

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Man, Economy, and State witten over a decade ago

It should be noted that when Rothbard wrote about prices being set by the market, although true, he was certainly not citing this specific Time Warner/Comcast merger as reference.

Your headline falsely attributes his words something he has just recently commented on.

This is wholly inappropriate.

Rothbard also writes that although the natural tendency is for prices to meet supply/demand - the unfortunate aspect is that free-markets often don't work within monopolies, and monopolies themselves are a function of government intervention. In other words, monopolies would not exist had it not have been for government intervention in the first place.

It is not accurate to suggest that Rothbard would defend the Comcast/Time Warner merger without first mentioning the government intervention that has allowed for this undesirable scenario in the first place.

there is not a monopoly in cable delivery

Sure the government has intervened and distorted the marketplace, but there is still competition in the current cable/internet provider marketplace. One could argue that there would be more competition with less intervention, but you cannot state unequivocally that would be the case. I have no idea how the market would differ. With regulation removed the landscape could be unrecognizable.
I do agree that there cannot be monopoly without government intervention. In a marketplace with no government intervention even if there appeared to be one supplier of a good or service the lone player would still be influenced by passive forces, the chance that another supplier enter the market to seize an opportunity.

I think that you could say unequivocally that there would...

... be more competition in the cable/internet provider market place were it not for government intervention. In the state that I live (Oregon) comcast and dish are the only two choices that I have for television, and dish is only ok if it isn't raining and if you have ever been to Oregon you would know that it's always raining. Unless, that is, I wanted to stream my TV from the internet, which I don't. The only competing internet provider is a local company that I very much wanted to support and actually used for the first year living at the house that I'm in now, but the internet speed was unbearable. Comcast works very closely with states across the nation and brings in about $250 million in official state subsidies. They are most certainly getting other deals from the federal government and other public sources. I would think that it would suffice to say that comcast gets more than the help it needs from government to drown competition.

But I also would have to agree with you that this merger is not going to have much of an impact as far as the price of cable and internet service goes. And I believe that Rothbard reiterated Mises in his definition of a monopoly as a company that can reap monopoly gains, which differs distinctly from just being a company that is the only one in a particular industry. I upvoted your post because I think that we need to remember basic economics sometimes and not jump to conspiracy every time a large company restructures. Even though I could most certainly be described as a conspiracy theorist.

In my city there is a total monopoly in cable delivery

You get Cox or you don't get cable. Time Warner used to compete in our market but they traded regions with Cox. So now, Time Warner gets their own region and Cox get's ours. Both of whom no longer have to compete with each other.

The only alternative to Cox in my city is to get Satellite, which I have started below, has been removed as an option for many renters in less you seek legal recourse. As you know, satellite is not cheap either.

I disagree

There is another alternative. Get an antenna and procureinternet service from an internet provider other than Cox. Cut the cord.

Hello?

Anyone home?

Cox is the cable/ISP in my town, and that is it.

Obviously

Obviously he is not literally talking about today's merger. It's simply a way to relate to a modern topic.

There are good points to be made however , as you suggest, about th crony capitalist nature of the existence of giant cable oligopolies, but there is no reason for a government to prevent two private companies from merging and many of the common objections are based on false premises,

http://lionsofliberty.com/
*Advancing the Ideas of Liberty Daily*

True, two wrongs dont make a right

However - you pick your battles.

On a scale of 1-10 I am a -1 in caring if government prevents the merger of 2 giant cable oligopolies.

Did you know that in California, there is a law that prevents landowners/land management companies from forcing renters into getting cable? Apparently, cable companies at one point were approaching land management companies and giving them a kickback to disallow tenants to put satellite antennas on their balcony/roof. This kept competition out and caused cable prices to rise. Later, they caught on to what was happening and passed a law saying that this was not allowed. Now, you would argue that the landowner has a right to do whatever they want, even forcing their renters out of getting satellite. And you would be right. That being said, I am totally uninterested. I would not battle that until 9,000,000 other things.

I also want to say

That it never ceases to amaze me how willing the republican/conservative/libertarian always rushes to defend the corporation on what is so obviously bad news.

http://s8.postimg.org/5wbq6bydg/att_breakup.jpg

I'm going to reread that

I'm going to reread that again in detail.

But I disagree strongly. I'll try to change my mind.

Check out http://ronpaulforums.com for activism and news.

Good stuff

Love applying Murray to current events