council, after the united states hat hit one in, however, one thing all sides still do agree on, and that is more humanitarian aid for the region. i'm tony harris, inside story is next on al jazeera america. the number one and two cable -- you are of waying this program over at cable, is is this bad news, good news, or to be determined? that's the inside story. hello, i'm ray swarez.

the largest communications company in the world by revenue. it owns nbc universal, comcast cable, e entertainment television, the golf challenge, university pictures. it owns cable operations in 29 states local news and sports channel, internet and cloud computing services. now the two plan to become one, merging the first and second kyle providers to control a big share of the american cable t.v. market, and put the other pet r toes in the shade. if you are watching us on television, you are by definition a cable tv customer. and whether you get your service from comcast, time warner, or another company, this merger may have long term impact on a product you buy. what this massive merger will mean for their competitors, and the tens of millions of customers

who buy able, internet, and other communications services is the inside story. the two are planning to join forces by the end of 24 year. comcast would absorb time warner for some $45 billion worth of stock. >> i think it is incredibly exciting. the move will first effect the 33 million subscribers. >> the invasion that's going to be enabled by the two companies coming together, i think can be truly spectacular. >> new product, better product, and the opportunity for our customers is terrific. >> negotiations between the two, and another cable company charter communications crumbled opening the door. the massive americaner is

raising questions. will the new cable provider hinder competition and options for subscribers. as we look at any competition, of which there's much, whether it's direct tv, at&t, vios, verizon, this allows us to compete better by bringing own products into the new market. >> time wanter ceo agreed. >> no reduction in competition, improved customer experiences. and we think that this will clear all the regulatory hurdles. >> comcast is also a major player in broadband. the comcast deal brings new focus to the on going battle over net neutrality that's the right of content provider toes have equal access to the internet. after a u.s. court of appeals struck down regulations. the court ruled the

f.c.c. does have regulatory authority, but it used the wrong legal justification. so now the fcc can rewrite the rules, or copping can act. the concern is that comcast, and other broadband providers could give preferential treatment to their own produced content, and that critics say can drive up the price for consumers. the planned acquisition comes at a critical time in the history of table television, overall subscriptions and ratings are on the decline. online video services like netflix and hue lue are on the ride. a new wave of cord cutters, households opting out, are putting pressure on cable provisors like time warner and comcast. time warner lost close to 1 million cable t.v. sub describers in 2013, and more than 5 million subscribers opted out of table overall, between 2010 and 2013.

the merger that seeks to join two big players in american communications. on this edition of inside story. joining us now, the ceo of free press, from new york, a recorder with the new york times who covered mergers and acquisitions for the paper, and deal book, and barron -- a lawyer, and president of tech freedom, which is a technology policy think tank. david, let me start with you, you tweeted out to your followers in surprise of how quickly this moved along, was there no long dance before this announcement? >> well, these two companyings have been in touch over the years. but what has happened is that charter communications as really made a push to try to get a deal done with time warner cable.

charter was going to have to take on a lot of debt, they wanted to do a good portion of the deal in stock, and they believed that a stock after a deal would not be that valuable. he quietly reached out to brian roberts the ceo of comcast, he said let's restart these deal talks. over the last couple of weeks those talk prod seeded but even then, they couldn't get all the way there. only after brian roberts went out on a road show, after fourth quarter earnings on january 28th, and he heard from comcast main investors that they, in fact, want add deal to be done between comcast and time warner cable, did he come back just ten days ago, called back, rob marcus and say let's get this done, and just in the last week, the two sides hammered out final details. >> but there were with those worries about charter stuff. this deal, from comcast is for all stock.

>> rock marcus he said that's apples to oranges. he said charter stock even with cash is not nearly as valuable as comcast stock. the reason that is that charter would have to take on so much debt that the company would be barely nflment grade. comcast fox is now going to be backed up, not only by the largest collection of cable operators but al of course by incomes universal, which had just completed acquiring last year. >> let me go back to washington you heard earlier talking about how good this would be for the consumer. called nit no way anticompetitive, is this really good, and why? >> i think it is. and he is right. the thing to understand is that cable companies in's generally only one cable company in the market so they don't

compete directly with each other. time warner would simply beery placed by comcast. the concern, about mergers like this has never been about what that sort of what we call horsetail competition. a concern that maybe for the cable provider got too large there would be leverage over the programmers. it is important to note, that number one, that cuts both ways. in some respect that sort of leverage can very much help consumers because right now the reason the cable bills are going up, is that the real power the market power in this industry is really held by the content owners. they are the one whose are extracting more and more royalties every year for cable channels. and that's what gets passed on to consumers and if comcast gains leverage here, they may help in that respect. but the other concern is

that a company like comcast may use it's leverage to favor it's own affiliated content, or might be able to stop some other new cable market. new program or challenge from gaining scale. and it is important to note that is h sec has twice tried to implement a cap on the size of single cable operator. twice failed. this is interesting because it would control nearly 30% of the market. >> and indeed, that is deliberate, the company has said it will voluntarily sell off some of the subscribers in order to stay below that 30% goal, which again is not a legal threshold, but it is basically what the sec has always seemed to think could potentially be a problem. etch if it is a problem, we aren't there. >> is this as ben nine as

we heard him describe? >> i don't think so. i think it would be a disaster for consumers. i think they will feel it. we will see bills go higher and higher. we are talking about the. >> laest cable company in the company, the largest internet service provider scooping up the number two cable company. this is going to give comcast an immense amount of power over what we watch, see, hear, read, and download every day. i would say too much power. i think comcast is moving very aggressively, but it is very important, that the justice department, and the fec scrutinize this deal. deals like this widely have antitrust laws. it is why the s.e.c. needs to measure is is nit the public interest, i don't know how they will see it is.

because their content producers and control such a big share of the market? >> well, no one with is saying that the deal shouldn't be scrutinized and it will. but what is likely to happen, is that the f.c.c. will find that the conditions that were imposed when it bought nbc, those conditions will simply be extended to time warner cable and i am a little surprised, because somebody like craig who believes very strongly in the importance of neutrality rules out to see this as a victory. because they were struck down by the circuit, even though the f.c.c. can continue to enforce in an informal way. the fact is comcast is still subject to those same rules. and now 8 million more of subscribers will be subject to those rules. toes is just a way of saying there may be a need for conditions, but those conditions are probably largely already in place, by virtue of

that previous merger. >> with big mergers of this kind, off the parties going into the regulatory process concede that they are going to have to do some things to sweeten the deal do we know publicly what the two companies plan to make sure there's no market control antitrust problems in. >> well, some of that was just covered but there's also another deal technique, that everyone on wall street is scrutinizing and that's the absence of a reverse break free. which is to say there's no stipulation if the dealals apart that comcast would have to pay time warner cable $2 billion that sometime shows up in big deals like this. that attracts some antitrust scrutiny, but in this case, the parties decided that nothing having a fee is a sign of strength, and a sign of

faith that the deal will get done. some of the last minute negotiations are them saying kay, we will go alone, if you admit t commit to those net neutrality. so this is very much on their mind. but again, everybody believes this deal can get done. >> what it means when the two companies involve redirect examination so heavily invested we will take a short break and hit that when we come back, this is inside story.

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warner. or when google bought youtube. you need a scorecard to follow it all. news today is a huge play and coil, comcast wants to buy time warner for $45 billion. number one, takes over number two, to create a bigger number one. this mergeser about a lot more than just cable t.v., and on our program today we are discussing what it means the r the business of media, and for you the consumer. craig aaron, we should talk about net neutrality. the internet is very important. >> broadband is the future, comcast is the largest internet service provider, time warner cable add as big footprint, as we talked about earlier. so in the end, this is about broadband, to keep tying that broad band

product, a very profitable product for them, to their television services. if they can keep you sub vising to cable, in order to get the content you want to see that's very good for their business. for most americans this cable company may be their only option for high speed broadband. not in every market, but in most places. this deal happens that will be comcast. >> how does net neutrality and the rules and the debate about the future of the regulation, pray into this corporate merger? >> well, the it is a red herring for two reasons. comcast is subject to the rules. they agreed to that, and that condition runs until 2018, they may extend it here, even if they don't, they didn't really lose the case, they simply had the order struck down. but they had the court

grant them broad authority to grant them more then they tried to do. so the fact of the matser while i think the f.c.c. should be more careful, they have broad authority to regulate, and for that reason, i think that's why you will see the merger go through, because if there is a concern, the f.c.c. can always address then. and the conditions that are in place today are not just about net neutrality, but by making shurna comcast doesn't leverage the media content that it owns. that it bout from universal, to make sure it doesn't discriminate over the top video providers. so those should allow the concerns. >> it offers more speed than time warner cable does. if the concern is getting better broadband, i think

it is a great deal, and it is supposed to save $1.5 billion. >> david, we hear so much about cable cutters does this position the company in a different way. do start looking past cable t.v. as a product? >> this is certainly that the c.e.o. has been working on for several years if you look back to the universal deal, that was about creating a company that had both content and distribution. this now pushing the distribution side, but as it was just said, also really emphasizes the future of distribution is going to be over the web, not through traditional television pipes. >> but the web enters a lot of homes, craig aaron, via cable television, doesn't it? two same -- >> it is by far the number one source. it is their only option,

if they want truly high speed broadband that's the kind of power that cable will have over what we watch, see, hear, and read. and their ability to stir zero with that connection in the future, not that far down the line, is problematic. their ability to impose data caps. their birth to slow down things like netflix, and potential competitors. favor their own content. this is their own vision, this is what they have talked about, when they are in talking to their fellow companies when they are at trade shows. the reason there's a net neutrality condition on the comcast nbc mergeser that comcast got caught violating net neutrality. they have a record of this, so it is pretty cold comfort to me that comcast is now indicating on day one of this giant merger, that oh, we will went respect it forever, don't worry, you can trust us. but you never heard on the list of these great

consumer benefits are lower prices. because the only direction that cable prizes have gone are up, up, and up, again. >> again. so the concern of course has always been, as i said earlier, about vertical pressure. congress was always afraid that if cable providers got too big, they would have too much leverage. i could stipulate that could be a concern. and it was in the 1990s when most were owned by cable operate r toes. what we are really talking about, is a situation where it really has it'snd has ties. but what it can do -- >> for four years and maybe for longer, and even when that expires the sec still has it's own rules. it had broad authority. the point i am trying to

make, is complaining about two problems. the second problem he mentioned is the cable bills are rising and i would suggest to him, that that is not necessarily because of cable companies it is because the people that have the power here are the programmers and the fact is that sometimes it is easier to fight mark power, sometimes it is the only way it can be done, and a combined company can get better deals. and you may see prices far or not rise as quickly. >> we will talk about the power of the programmers after this break, because this creates a company, this merger, if it goes through, that is powerful as a programmer, as well. time fortous take a short break, when we come back, we will talk about the future of what with you read, watch, listen to in your home, this is inside story.

welcome back to inside story.

how we consume media in this country is changing al the speed of the internet. and as always the media business is reacting and adapting. comcast the biggest blare in cable is going to get much bigger with the acquisition of time warner. on this edition of our program, we are discussing the deal, and what it tells us about the future, and david, you were trying to jump in before the break, sorry. >> there is indeed an armed race going on between the distributors and the content providers. and one thing we learned is that discovery communications major provider of cable networks including discovery, animal planet, etc., recent liquored doing a deal for scripts another big cable network provider. was reason they didn't is they feel like they have enough leverage now. people close to that deal, if the cable an ray tors get any bigger we may have to consolidate.

so this deal could spark yet another round of consolidation is that is so they that this race is still going to rage for years and years. and to be sure, it is driving up prices for cable subscribers. but looking at what the cable content providers have plans there is little reason to think that will stop any time soon. >> would this company, if the deal was going to go through, have to promise that it wouldn't play hard ball on channel placement, on carriage of different content providers offings. there the ways they would have to be really muscular on what they see on television. >> if you hate the cable

guy, you will really hate the cable guy on steroids. and for comcast, i think it is getting rid of a lot of pressure. if you are comcast you are happy to see them rise, because that goes in your other pocket. i think this is a situation where they may make a lot of. pros. but for the viewers in really a lose lose situation. where it it is going to hit them in their wallet, leave them with fewer choices and put comcast in a really powerful gate keeper role, over the future of the internet, over the future of the t.v., and because of marry massive size and reach, they will really be calling a lot of the shots. >> why wouldn't this combined company use it's power in that way? that's one of the reasons that companies get big,

isn't it? 20 control marketplaces for their product? >> sure, but number one, they already agreed to a set of conditionings that prevent them from doing what you just described. the s.e.c. still has quite broad authority to police those. now, if what yo are concerninged about is that the cable companies just want to get bigger it is worth noting that market share the cable's market share has decreased. in fact, comcast is not the number bun video distributor. that's a satellite company. companies like verizon, google, which is billed on it's own final network, century limping, this is where i would agree with craig.

we should be doing everything we can to make sure they have as says aas a time as possible, and don't have to go through burdensome hurdles to roll out fiber. if that's the problem that we don't have fluff competition, we can deal with that, and quite frankly, if we intend the next six months that would be wasting arguing about this deal, and conditions already in place, if we spent that time talking about encouraging broadband, we could make the market more competitive. >> we will have to have a very good conversation in the future, about what the future holds for people just trying to get content into their homes because obviously that marketplace in flux. thank you to all of you for being with me today. in washington i'm ray swarez.

>> nogales, arizona. a bus has arrived filled with people being deported from the united states. >> right now we're headed to san juan bosco, a shelter here in nogales where the mexican immigration authorities have picked the people who were just deported, they take them there so they have a place to stay on their first night back in mexico. >> many thought 2013 would be the year when congress finally