from http://www.bloomberg.com/news/2014-01-27/time-warner-cable-sale-will-cost-us-all.html

The big four U.S. cable companies, which control more than 60 percent of the U.S. market, may soon become just three. Charter Communications Inc., now the fourth largest, has since last June been trying to buy Time Warner Cable Inc., the second largest. And it now looks as if the shareholders of TWC, which has been floundering recently, may force the company’s board to sell.

If merger and acquisitions activity in the telecommunications realm had a soundtrack, this moment would be accompanied by the menacing bass rumble of “Jaws.” For if this deal goes through, customers of TWC, Charter and also Comcast Corp. — as well as all the content companies that want to reach those customers — will probably see prices rise, with no corresponding improvement in service.

After all, cable is a business that relies on scale; the game is to increase the number of subscribers and lower all possible costs, then grind away with one price increase after another. And when big operators get bigger, their scale grows.

Cable companies are also unregulated and face little competition. In 77 percent of the U.S., they operate even without competition from Verizon’s fiber-optic FiOS service, so their pricing power is almost unrestrained.

One big player working behind the scenes to push the proposed Charter-TWC deal is billionaire John Malone, who commands Liberty Global, the largest cable company in the world. Last March, Liberty Media, another company controlled by Malone, spent $2.6 billion for a 27 percent stake in Charter. With just 4.5 million subscribers, Charter is far smaller than Time Warner Cable (which has 11 million subscribers) and Comcast (20 million), but Malone knows that the combined company will be able to pay less than Charter spends now for pay-TV programming

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