The merger between cable providers Comcast and Time Warner Cable in New York City is currently up in the air, as a vote to approve the merger is being delayed. The New York Public Service Commission (NYPSC) was set to vote on a 45 billion dollar transaction last Wednesday, but the vote was pushed back until November 13th. Why are regulators against the merger of two successful companies? The answer is an often-ignored part of business deals, the quality of customer service. The reputation of both Time Warner Cable’s and Comcast’s customer service is so poor that the NYPSC are unsure if they want to go through with the merging. Outrage over the customer service of these companies has gone as far as anti-Time Warner Cable groups on Facebook dedicated to fuming customers reaching thousands of likes.
According to Kalb (2013), a writer for the Business Insider, Time Warner Cable lost 140,000 subscribers to other competitive businesses due to their reputation of poor customer service. The writers of this post have also had bad experiences with TWC and Comcast respectively so it’s understandable that NYC is not in a hurry to merge the companies. This is explained by Homans (1958) in his Social Exchange Theory, which is weighing the costs and benefits of relationships. There are many economic benefits of merging of companies, but there are also severe costs, such as a potential unsatisfied customer base. This theory entails that the New York Public Service Commission is the main decider who is dealing with the cost and benefits of this situation. They must go through a process that will show that the benefits of this merge will outweigh the costs of what could happen if these companies meshed together. However, due to the commission rescheduling the vote, they clearly have not seen that the benefits of this merge will outweigh the costs that could affect a numerous amount of viewers as a whole.
How is this damaging to Time Warner Cable’s and Comcast’s individual brands? The fact that a potential expansion of their companies’ reach is being challenged due to consumer’s opinion is a colossal issue. When a company has a poor reputation in relation to the way they handle clients it damages their overall credibility as a brand. Based on the idea of commodity culture, as consumers we identify and define ourselves with the brands we join and part take in. With TWC’s and Comcast’s poor reputations of not dedicating their employees to helping their customers to their full abilities, why would new and upcoming consumers want to join its brand and organization?
-Margaret Cafasso, Kierstin Geary, Connor Gold, Olivia Sadler, Hannah Zeskind
A VERY important story to follow. The use of Social Exchange Theory is good but I would push it even more. If the customer service for both companies stinks how did they get and how are they staying so big? I think one possible explanation is actually within Social Exchange Theory. CLalt is a concept with the theory. It is an abbreviation for Comparison Level of Alternatives. People often stay in bad exchanges (and unfortunately, even in abusive exchanges) when they don’t see any viable alternatives out there. The case of cable TV is a great example. I personally would not think that the customer service issue is really a big deal in terms of the merger. It stinks now because there really is no competition for either company in their respective markets. They are defacto monopolies either way until there is some competition (hulu etc. are close but not quite). BUT, what is very troubling is what is not being talked about. The merger then puts them in the drivers seat with various content providers. A very (VERY) small group of people now define what constitutes viable content. If this conglomerate forms what if they decide to drop FOX news or MSNBC or CNN? What if they decided to drop ESPN? You say “oh they would never do that!” But they could. And they will do much smaller versions of that and decide which nature stations stay viable and which ones go under, etc. That should be the main concern. How will programming “biodiversity” be preserved in the merger?
You made many great points in your comment! I feel like this issue hits home with so many people, because many of us use TWC or Comcast and the majority of us have had or heard of people having problems with their customer service. You are right when you say that they are monopolies either way. If they do not merge, they are both still in control of this market and if they do merge, there is now little to no competition left. I have personally seen smaller stations broadcasting for their viewers to vote against TWC dropping them. This is a sad reality of monopolies. They have the control and there is little we can do to stop them. We might not think that they would drop the major stations, but if it is something that they could profit from who says they would not. They clearly do not value customer service, so what is stopping them?