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Charter Buyout of Time Warner Bad for Customers Says Santa Monica Consumer Group

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May 28, 2015 -- Charter Communications’ bid to buy Time Warner Cable for $55.3 billion is a bad deal for customers, said the founder of Santa Monica-based Consumer Watchdog.

“Another merger? These mergers only benefit the top CEOs; they never benefit the consumers,” said Harvey Rosenfield, who founded the advocacy group in 1985, in an interview this week with a Los Angeles radio station.

Like last month’s failed $45.2 billion bid by Comcast for Time Warner, a merger that collapsed after intense pressure from government regulators, Rosenfield predicted the Charter deal for Time Warner also will fall through.

“The federal government ought to declare a moratorium on merger applications for two years” for the phone and cable industries, said Rosenfield.

The cable industry, in particular, has seen a wave of consolidations as cable provides are increasingly losing subscribers to online video services like Netflex and Hulu.

Merging into bigger companies gives cable providers a greater share of streaming programming and allows them to better compete with entertainment companies that provide online channels like HBO now offers.

In a statement Tuesday, Federal Communications Commission Chairman Tom Wheeler said that the FCC weighs every merger on its own to see if it will be in the public interest.

“An absence of harm is not sufficient,” he told The Associated Press.

He said the FCC “will look to see how American consumers would benefit” from the deal.

Charter noted that it will have less than 30 percent of the customers in the U.S. that the FCC defines as broadband: Those downloading at 25 megabit-per-second and faster. Comcast plus Time Warner Cable would have had more than half of those subscribers.

“We're a very different company from Comcast and this is a very different transaction,” Charter CEO Tom Rutledge told reporters on Tuesday.

 “We're confident it's going to get done,” said Time Warner Cable CEO Rob Marcus.

Charter, combined with Time Warner Cable and Bright House, which Charter acquired this week for $10 billion, will have nearly 24 million customers, compared with Comcast's 27.2 million.

But Rosenfield said such large mergers have never resulted in lower rates for cable subscribers.