Does a bigger company necessarily mean a better company for consumers?
Recently, there have been stories about proposed mergers in information/entertainment businesses. Chief among those are the proposed merger between Time Warner Cable with Comcast and, the newest one, AT&T with Direct TV.
The Direct TV merger with AT&T is really interesting because as recently as March, there was a rumor that Direct had been approached by competitor Dish Network about possibly joining ranks.
As the Fierce Cable website (fiercecable.com) pointed out, AT&T getting together with Direct may help Comcast get final approval for the Time Warner deal. Comcast may have had problems proving anyone could compete with a merged Comcast/Time Warner - but now it may be able to point to the new AT&T/Direct as a big enough competitor.
We are wary when giants merge because when a consumer's choices are narrowed, prices usually go higher. Have the mergers of United-Continental, Delta-Northwest and American-USAir resulted in lower airfares? The answer is a resounding "No!"
We recently read an article that noted that even traditional low-fare leader Southwest Airlines has had its reputation tempered somewhat since acquiring Air Tran. The article noted that on many of its routes, Southwest no longer has the lowest fares.
So we're nervous when we see choices in what appears to be the fastest expanding industry - Internet and entertainment providers - contracting. If there are only a few, huge companies, the consumer is going to pay a heavy price.
Regulators need to be sure these mega-mergers don't knock the competitiveness out of important industries.
* Editorials reflect the opinion of the publisher.