Bigger is not better. Despite endless claims that mergers, acquisitions and consolidation brings operating efficiencies and cost savings, for most customers it means only one thing: a higher cable bill. The Wall Street Journal traced the ancestors of some of today’s largest cable operators, cobbled together in takeovers, buyouts, and in the case of Adelphia, criminal activity leading to bankruptcy and absorption by Comcast and Time Warner Cable .

Wall Street analysts are pondering what deals are coming next, with Cablevision, Suddenlink, Mediacom, and Cable ONE all top targets. Among the current players, Charter is by far the most aggressive buyer and will likely be in the market for some or all of those smaller cable systems soon enough. Just remember, someone has to pay for those blockbuster merger deals, debt financing and executive bonuses.

Anyone in their 40s probably can recall companies like Jones, TCI, Falcon, Prime and Media General. They are all long gone, much the same way Bell Atlantic, SBC, Pacific Bell, BellSouth, and Ameritech have been absorbed into the AT&T and Verizon Continuum.

(Image: Crooks and Liars)

The mother of all cable mergers between Comcast and Time Warner Cable will bring tens of millions in executive bonuses and golden parachutes, massive job losses at Time Warner, a lucrative stock buyback that will help Comcast shareholders, and a higher cable bill and usage cap for you.

Back in 2008 when Stop the Cap! started we offered this tip for rational living: When a cable company promises you it has a great deal that will save you money, grab your wallet and run. Just as the sun rises in the east, cable bills never really go down, they just keep going up.

Comcast at least admits that fact of life when discussing the “benefits” of a merger with Time Warner Cable.

“We’re certainly not promising that customer bills are going to go down or even that they’re going to increase less rapidly,” David L. Cohen, a Comcast executive vice president, said in a conference call with reporters.

Heaven forbid.

Bigger has never been better for the cable industry. As waves of consolidation reduce the number of significant cable operators from dozens to fewer than 10, cable subscribers have contributed mightily to finance the merger deals. What used to be a big basic cable bill of $20 a month will soon exceed $75, and rising. The industry has always tied itself to the value proposition that a month of cable television costs no more than a cup of coffee. In 1990, it was Maxwell House. Today it’s closer to a Starbucks Grande Latte once taxes, fees, and surcharges are included.

(Image: Mike Keefe)

The New York Times reports cable prices have grown at more than twice the rate of inflation over the last 17 years. But Comcast likes to say you are getting a lot more bang for your cable buck.

“Where we might have had 100 standard-definition channels in a package more than a decade ago, today you have 250 standard-definition channels plus 100 channels in high-definition,” Cohen told the Times. “The level of service being provided is night and day.”

According to Cohen’s way of thinking, that matters a lot more to you and I than the “Please pay this amount” at the bottom of your monthly bill.

The bountiful cornucopia that is Cohen’s idea of cable television bliss includes networks like Bonsai Xtreme, Office Supplies Network, Glidden’s Paint Dry 24/7, and… no, we’re kidding. But are TV One, Ovation, Youtoo TV, and Retirement Living TV any more compelling? You are probably paying for one or more of them now. Extra credit to customers that can even find them on their cable dial.

Time Warner Cable and Comcast carry most of the same networks, but they arrange them differently. Time Warner likes the shovel-them-all-at-you approach with one simple digital expanded cable tier. Only a handful of networks that should be on the basic lineup cost a little more and most of them are HD movie channels (and inexplicably RFD-TV, which features cattle auctions every Friday afternoon). Comcast nails their customers with a range of tiers and compels many to keep upgrading to get the networks they really want. Just ask subscribers like Thomas Howell of Seattle who was livid when Comcast moved Turner Classic Movies out of the equivalent of basic cable and put it on an enhanced basic tier that cost him an extra $18 a month.

What channels will they add next?

“The s*** they shovel on cable these days and they can’t give us one channel with good movies that aren’t loaded with sex and violence without raping us for more money?” Howell told Stop the Cap! “My wife and I took back their box and we got satellite TV instead. We don’t want to pay for the crap they keep putting on our TV, but they don’t give you much choice.”

Comcast executives are living in a parallel universe and are not listening:

“I think consumers are going to benefit from this transaction,” Cohen added. “They’re going to benefit by quality of service, by quality of offerings, by technological innovation, and I don’t believe there’s any way to argue that they’re going to be hurt from a price perspective as a result of this transaction.”

“Mr. Cohen can pay my cable bill, then,” responded Howell. “He’s obviously got the money to pay whatever Comcast is asking, if he doesn’t get it for free.”

Remarkably even some House Republicans that are normally reticent about interfering with corporate affairs are expressing concern about the deal — especially those who represent districts served by either cable company.

You’re gonna love this merger. It’s best best best!

“The proposed merger between Comcast and Time Warner Cable could have a significant impact on competition in the video and broadband marketplace,” said Virginia Republican Bob Goodlatte, the House Judiciary Committee Chairman. Comcast dominates Virginia.

Comcast and Time Warner argue they are not competitors so it will have no impact on the competitive landscape.

The argument from merger proponents is that a larger Comcast will have a stronger position to fight programmer rate increases. But Comcast has a poor record of success at its current monolithic size, with no evidence making it larger will make much difference. Even if it did, will those savings be passed on to subscribers? Cohen signals they won’t when he warns cable bills will not go down as a result of the merger. In fact, Comcast recently added a $1.50 monthly Broadcast TV surcharge to alienate local television stations in the eyes of subscribers and boost Comcast’s profits. But most will blame the cable company for the rate increase, not the local CBS station.

Consumers generally hate their local cable company, with some minor exceptions (WOW! does very well by customers, as does Verizon’s FiOS in customer rankings). Why? Because in 1995 you paid an average of $22.35 for 44 channels of basic cable. In 2012, you paid $61.63 for 150 channels, 100 or more you never watch and don’t want.

Demands for a-la-carte — pay only for the channels you want — have fallen on deaf ears for years, with nothing on the horizon to change the current pricing model. Besides, some critics warn if a-la-carte does become reality, cable companies will dramatically jack up the per channel price to protect their revenue.

John Malone’s power play for a Charter Communications’ takeover of Time Warner Cable would leave the nation’s second largest cable operator $60 billion in debt and has already cost creditors holding Time Warner Cable bonds $1.8 billion in value as markets react to the rumors of a leveraged buyout.

Two people familiar with ongoing private discussions report Liberty Media is prepared to borrow against its own or Time Warner Cable’s assets to put the deal together, spiking debt levels into junk territory. Charter itself already has the most debt among junk-rated U.S. cable companies, with $12.8 billion owed, according to Bloomberg.

Malone has structured highly leveraged acquisition deals throughout his history in the cable industry, borrowing heavily to finance merger deals and then raising subscriber rates to boost revenue to cut debt.

Time Warner Cable is highly exposed to a hostile takeover because its bonds lack safety provisions that would discourage the kind of acquisition Malone is attempting. Adam Cohen, founder of independent research company Covenant Review said Time Warner’s bonds are easily transferable to Charter’s name.

“The combined entity will be junk status, and the Time Warner bonds could be even junkier than the Charter bonds,” Cohen said in a telephone interview with Bloomberg. “This could be one of the worst covenant-related disasters ever for investment-grade bondholders.”

Moody’s senior vice president Neil Begley has suggested Time Warner Cable seriously consider “the Moe Green Strategy,” a nod to The Godfather.

‘You don’t buy Moe Green, Moe Green buys you!’

Begley suggested Time Warner Cable could consider putting in a bid to acquire Charter just to keep Malone on the outside looking in. That might be more effective than Time Warner acquiring a number of smaller cable operators like Cablevision, Mediacom, Cable ONE, and others to outflank Malone.

Malone is using an investment in Charter Communications as a springboard to launch his vision of a tightly consolidated cable industry, with just a handful of players providing service, instead of the dozen or so significant cable companies now in business. Malone sees Comcast as untouchable, so rolling up other operators around a Time Warner-Charter deal would be the next best thing, analysts suggest.