Wanna know why Time Warner might merge with another major cable company (Comcast or Charter)?
It’s because of Meg.
Meg Cramer is 25, a producer for the Marketplace Tech Report.
Hey Meg um do you have cable?
Do you like know anyone who has cable?
No. Umm. My parents have cable.
People -- especially those under thirty – aren’t wedded to cable. They have smartphones and tablets and Netflix and Hulu and Amazon and iTunes and Google Play.
“Cable’s not going out of business tomorrow, but the industry is under significant pressure” according to Porter Bibb, managing partner at MediaTech Capital. “Consolidation has become a way of surviving in cable.”
Consolidation lets cable operators get bigger, and therefore wield more power in negotiations with the channels and networks they carry. Those content providers have been demanding more and more profits from cable operators.
For example, last summer, Time Warner Cable had an epic battle with CBS over how much the cable company should pay CBS for carrying its programming. Things got so bad that CBS just pulled the plug and refused to allow Time Warner to broadcast its channel for a month.
“Approximately 100,000 people opted out of Time Warner Cable,” says Bibb. “And that’s going to happen more and more frequently – not just to Time Warner but to other cable operators -- for the simple reason that content is now king.”
Bibb says another cash cow of the cable industry is coming under threat as well: bundling. That’s where you might only want one channel, but you have to pay for 50. There is a growing movement to replace that with what’s called the “Chinese menu” option, where channels are a la carte like dim sum.
Incidentally, cable’s loss of status in the world of content is exactly why a merger might not trigger anti-trust laws. “The anti-trust laws prevent a lessening of competition in any relevant market,” explains Bob Lande, Venable Professor of Law at the University of Baltimore and a director at the American Antitrust Institute. “ The problem here is what markets are we talking about?” Cable doesn’t just compete with other cable companies, it competes with the internet. So consolidation in cable isn’t necessarily viewed by regulators in the same way as consolidation in, say, the cookie industry – even though in Lande’s view the media industry deserves special attention.
“To say it’s a big deal is an understatement - it’ll take a long time to resolve, these issues are very thorny,” says Lande, adding that regulators would also have to figure out if competition was being lessened in the production side, the buying side, and many other facets other than simply bringing cable to people’s homes.
As to the effect of such consolidation on consumers, “that we just don’t know, that’s the ultimate question from the merger.”
Boston University economist Laurence Kotlikoff is considerably more certain. He says consolidation might fly legally, but it won’t be a good deal for consumers. In many regions of the country cable companies already operate like miniature monopolies, and competition is impossible. He says consolidation would just exacerbate what’s already going on. “You get this monopolistic behavior where they charge much higher prices and give you lousy customer service.”
What? Lousy customer service from a cable company? That’s crazy.
Here's something you don't hear very often: there’s a health exchange that’s actually enrolling lots of people in insurance plans.
At Covered California, a state-run exchange, the computer works, 10,000 applications are completed every day, and nearly a quarter of all customers are 18-34 years old - the coveted young invincibles.
There’s no reason to mess with that.
Perhaps that’s why California said Thursday it won't be among the states doing a 180, and letting people keep their cancelled policies for another year.
If people were allowed to keep those bare-bones policies, especially young customers, they might stay away from the exchanges.
USC Professor Neeraj Sood says that would threaten California’s success.
“Now premiums go up, because premiums have to cover the cost of providing healthcare for this sicker population,” he says.
Some states are still deciding whether to let insurers renew plans that don’t meet certain standards set out by the Affordable Care Act, like covering pre-existing conditions and out-of-pocket spending caps.
And insurers are deciding whether they want to reissue those canceled policies.
Professor Sood isn’t sure there’s much incentive for the companies to sell bargain basement coverage anymore.
“I think with the new rules, you can sell a Toyota Corolla at full price to consumers. Or you can sell a BMW where the government gives you a 50 percent discount,” he says.
Not all insurers sell plans on the exchanges, so those firms could make money if they peel consumers away.
But Drexel University Public Health Professor and author Robert Field says he thinks most companies are playing the long game.
“When you cut through all the politics, they are getting tens of millions of potential new customers. And the government is requiring many of those people to buy their products,” he says.
Field says if insurers can extend the canceled policies only another 12 months, there’s not much to be gained.
The real action, he says, is on the exchanges.
Doctor Who fans have yet another thing to occupy their time. On the eve of the good doctor's 50th anniversary, Google has a doodle — or Whodle — just for them. Watch out for the Dalek.
When an Afghan toddler in Albuquerque was tested for lead at preschool, the child's blood levels were off the charts. A baby's brother's was, too. Why? It turns out that kajal, a traditional eyeliner used by the family, was 54 percent lead. It's a reminder of the health hazards posed by traditional cosmetics.
The 22-year-old prodigy defeated India's Viswanathan Anand over 10 games in Chennai, India. Carlsen becomes the highest-rated player of all time.
When the Senate gets back from its Thanksgiving recess in a couple of weeks, it's gonna be a whole new world. A simple majority -- just 51 votes -- will now suffice to get a presidential nominee to the floor for a vote by the full senate, and there are plenty of vacancies to be filled. The change has been called the "nuclear option."
We’re talking about the kind of job Mike Posner used to have. He was Assistant Secretary of State for the Bureau of Democracy, Human Rights and Labor. It took him five months to get confirmed, and he says he wasn’t an outlier.
“Bureaus, senior positions in the State Department [were] not filled for months and months at a time,” he remembers. “And it really makes doing work a lot more difficult.”
Ken Salazar was President Obama’s first Secretary of the Interior, and he says the worst thing about this de facto hiring freeze has been that “you’re not able to bring the effective leadership to manage the government of the United States.”
Jobs requiring Senate confirmation have become less and less attractive, and nominees have had to wait in what Salazar calls “a very strange limbo.”
“I have seen both Democrats and Republicans who have just gotten tired of the wait, and have withdrawn their names,” he notes.
So, what happens now that the logjam is broken?
Austan Goolsbee, the chair of President Obama’s Council of Economic Advisers, says the queue is full of mid-level appointees: “Deputy secretaries, under secretaries, assistant secretaries," he says, "who are the people that kind of have to make the trains run on time.”
Goolsbee says he expects things will move a lot less glacially now.
“I would presume they’re going to get all of those people through pretty quick.”
But the bottom line here is not that these nominees are going to get jobs, it is what they are going to do once they have them. They will make rules and regulations that will affect business and the whole economy.
Next year, for example, the Fed has three vacancies to fill, and at least one analyst is predicting that this rule change will make it much easier for the president to get his picks confirmed.
Next year, the White House says, Americans won't have to start signing up until Nov. 15. The administration says that will give insurers more time to prepare their rates. It also starts the enrollment period after the 2014 elections.