Tuesday, May 27, 2014

Darwin Asks Why Stop Acquisitions

The NY Times Editorial, A Cable Merger Too Far, worries that allowing Comcast to buy Time Warner Cable would create a too powerful entity with a huge controlling stake in cable and broadband service.  I say, so what?  Isn't this exactly what Darwin discovered in the animal kingdom that big animals eat little ones; we either conquer or adapt to survive.  It works the same way in business.  We have seen acquisitions and mergers across every industry as they grow from entrepreneurial to mature.  The big eight accounting firms are no more, the airline industry has fewer and fewer competitors, the auto makers almost died out from bankruptcy if not for the help of the US Government.  So why should the cable industry be any different.

While it would be nice to have more competition for cable service; frankly, we never really did.  Cable operators bought franchises to gain exclusivity and as a result, Comcast never competed head to head with Time Warner cable.  As a consumer, we were lucky to have the choice of a cable operator, telco, or satellite provider.  That choice doesn't go away with a Comcast acquisition. 

What should the FCC do?  Darwin still remains relevant.  The FCC should be encouraging new innovation, technology and new types of connectivity.  Adapt, change, or be eaten.  The future of content connectivity lies with new entrants with new technologies that can topple old technology off the mountain.  You can't stop the natural instinct to grow through acquisition but there are other means.

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