Comcast Was So Incredibly Full Of Crap During Its Merger Sales Pitch, The Government Is Considering Additional Punishment

from the whoops-a-daisy dept

While Comcast's attempted acquisition of Time Warner Cable may be dead in the water, information revealed during the company's ugly but often entertaining merger sales pitch may come back to haunt it. When Comcast started selling regulators on the idea of the Time Warner Cable merger, you'll recall it highlighted repeatedly how Comcast should be trusted because it had done such a bang up job adhering to the conditions placed on its acquisition of NBC Universal. Except when regulators tried to verify this M&A claim (which is already rare enough in telecom), they discovered that not only did Comcast write most of the conditions itself, it still somehow managed to repeatedly fail to adhere to them.

For example Comcast had to be fined $800,000 by the FCC for failing to offer and clearly advertise a relatively paltry 5 Mbps, $50 per month broadband tier. Similarly, the company's Internet Essentials program, which promised 5 Mbps, $10 broadband for low income communities and was a phenomenal PR boon for Comast -- at one point resulted in Philadelphia street protests for being hard to find, qualify, and sign up for. It was also revealed that Comcast ignored conditions intended to keep the company from hamstringing Internet video competitor Hulu, which it acquired as part of the NBC deal.

So yes, Comcast, you're really great at adhering to merger conditions, just as long as nobody actually bothers to look at how well you adhere to merger conditions. Given how closely the FCC had looked at whether companies adhered to merger conditions in the past (as in: not at all), Comcast's hubris here was understandable.

Most insider accounts had already suggested it was Comcast's lies surrounding the NBC deal that somehow chaffed regulators the most, though the unrelenting consumer loathing of the company certainly played a role in pressuring the DOJ and FCC to do the right thing by consumers. Interestingly, regulators are still so annoyed by Comcast's distortions -- and are so awash in evidence of bad behavior after the review (covering everything from advertising to poor treatment of minority-owned stations) -- that they're actually considering taking some additional action against Comcast:

"They’re sitting on a ton of potential evidence,” one source close to the process explained. "They’re asking themselves if they can create a separate proceeding or whether they need a new complaint to allow [the evidence] to be introduced."...Regulators may view the fact that Comcast didn’t win approval for its purchase of TWC as enough of a punishment, sources said. Others point out that the NBCUniversal deal terms need upholding — even after the TWC deal failed."

In short, the conversation at the FCC currently focuses on whether having the Comcast merger blocked is enough punishment for being immeasurably full of shit, or if regulators need to take some additional action to punish the company for being immeasurably full of shit. I'm guessing the former (with this data stored for ammunition in future interactions with Comcast), though that this is even a point of conversation at the FCC gives you some idea of just how immeasurably full of shit Comcast really was.

Filed Under: doj, fcc, merger conditions
Companies: comcast, nbc universal, time warner cable

Cable Execs Refuse To Offer Better TV Bundle Options Because Consumers Already Enjoy All The 'Value' They Can Handle

from the head-in-sand dept

Consumers have been clamoring for better cable TV pricing and more flexible channel options for the better part of the last decade, and for most of that time the broadcast and cable industry has been willfully -- almost gleefully -- ignoring them under the mistaken belief that the cable TV cash cow will live forever. With 2015 giving rise to a number of more flexible Internet video options, the conversation has heated up once again, leading to a very small number of companies (like Verizon) experimenting with modestly more flexible channel bundle packages where costly sports programming is broken out into its own tier.

However, the majority of cable TV executives remain with their heads planted squarely in the sand. When pressed on whether it would try to offer more consumer-friendly "skinny" channel bundles in response to consumer-driven industry trends, Time Warner Cable execs informed analysts recently that it would just be too confusing:

"There’s a lot of attraction in the press about skinny packages," echoed Dinesh C. Jain, chief operating officer of Time Warner Cable. “I think a lot of the times, customers don’t want to get bogged down in a lot of choices to make on those kinds of things. There’s a lot of value in our triple-play packaging right now and it’s a simpler sale."

Yes, you wouldn't want to confuse the consumer by offering them something more competitive than you do now. And when calculating "value," surely Time Warner Cable is including its excellent customer service, ranked worse than any other U.S. company in any industry? Time Warner Cable has been paying lip service to more flexible options since 2010 or before, yet they never seem to materialize. That's in part thanks to broadcasters, whose programming rates continue to sail skyward utterly untethered from reason. But cable companies aren't faultless; they raise rates wherever and whenever they can as well, whether that's for DVR rentals, extra fees just to pay your bill in person, or sneaky below the line charges to covertly drive up the advertised rate.

At the cable industry's Internet & Television Expo last week, cable executives again proclaimed they didn't see the need for more flexible, cost-conscious cable lineups, because customers already get way more value than they can possibly handle:

"People have always had choice in what they buy in their subscription package,” declared Charter Communications CEO Tom Rutledge. "The vast majority of customers tend to take the larger bundle, and the reason is, it’s a damn good value,” said Time Warner Cable CEO Rob Marcus after allowing that “More flexibility is better."

In other words, there's no need to offer greater choice or value because we're already really incredible at doing that. Except data across the board suggests that they aren't.

A Reuters/Ipsos poll released concurrently with these execs' comments found that 77% of U.S. adults say they'd prefer a la carte cable programming, a shift the industry has fought off for years by arguing it would kill niche channels (something that's happening anyway) and raise rates (something that's happening anyway). But it's not just a la carte the cable industry has been resistant to; it's any shift toward more compelling programming tiers. That same poll also found that 54% of consumers would like to be able to buy a core cable bundle that doesn't include ESPN, and 47% don't want cable news networks.

The cable and broadcast industry could work together to get out ahead of Internet video, but they're absolutely terrified of offering any products that would cannibalize their traditional cable TV subscriber bases. They're comforted by the fact that so many subscribers continue to pay an arm and a leg for bloated, expensive cable bundles, and believe that the giant pay TV fortress they've built will survive indefinitely. So like so many legacy industries, instead of meaningful, pre-emptive adaptation, the cable sector stands in the middle of the highway with a glassy eyed stare, confident in its resilience against the eighteen wheeler that bears down upon it.

Filed Under: a la carte, bundles, cable, skinny bundles, tv
Companies: charter communications, comcast, time warner cable, verizon

Blistering Hubris, Bald-Faced Lies And Atrocious Customer Service Kill Comcast's Merger Ambitions Dead

from the end-of-the-bloviating-road dept

Comcast's week just got notably worse with the news (barring some last minute miracle) that the cable giant will likely be walking away from its $45 billion acquisition of Time Warner Cable after leaks suggested the DOJ and FCC will likely be blocking the deal. Regulatory opposition was based in part on the belated realization that Comcast had failed to adhere to the conditions set in its 2011 acquisition of NBC, despite the fact that most of the conditions were volunteered and engineered by Comcast to be as meaningless as possible. The real deal killer however? More than a year's worth of unrelenting, negative media attention for what's arguably some of the worst customer service in any industry.

Leading this latest merger sales job for Comcast was top lobbyist David Cohen, who played a starring role in getting Comcast's 2011 acquisition of NBC approved, earning him the reputation for being a telecom policy and lobbying "rock star." As any well-paid lobbyist would, when tasked with a new merger to sell, Cohen repeatedly pushed a litany of utterly unbelievable deal benefits pulled entirely out of the ether, denied absolutely every criticism as illegitimate and irresponsible, then proudly proclaimed that nobody "reasonable or knowledgeable" could possibly object to the company's merger.

Cohen's secret weapon during the NBC acquisition was something Comcast called its "Internet Essentials" program, which provides $10, 5 Mbps broadband to homes that qualify for the National School Lunch Program. Cohen consistently touted Internet Essentials as an utterly selfless, altruistic effort to close the digital divide, wholly unrelated to the company's attempt to grease the M&A rails. There's many reasons why Cohen and Comcast failed to win the hearts of consumers and regulators, but Internet Essentials perfectly exemplifies Comcast's unique brand of hubris.

The program became an absolutely massive public relations boon to Comcast, which held junket after junket at schools across the nation, patting itself on the back for being a noble corporate citizen, with Cohen and politicians endlessly photographed surrounded by smiling children as they pretended to crush the digital divide in classrooms across America. The PR success of the effort even prompted Cohen to start calling himself Comcast's "Chief Diversity Officer," despite the fact the title's real goal was to help him dodge legal lobbying restrictions on how many hours a week he can lobby.

Since it worked so well for the NBC deal, Cohen and his lobbyist team started hyping the program even more heavily for the Time Warner Cable deal. The problem was, by this point people were starting to see through the effort. The program started taking national media heat for being hard to find, hard to qualify for, rife with caveats and little more than a faux-altruistic show pony for regulators. As a result, depending on the state, only about 11 to 15% of the millions of eligible households were able to sign up for the program. Stanford Law Professor Susan Crawford recently called Internet Essentials a "customer acquisition program masquerading as a philanthropic gesture," highlighting the restrictions Comcast baked into the program to ensure it had to do as little heavy lifting as possible:

"...only low-income families with school-age children are eligible for the program. It does nothing to close the digital divide for other underserved groups like the elderly, the disabled, and low-income childless adults. Plus, it’s hard to apply: the California Emerging Technology Fund says that it takes two or three months for applications to arrive. No existing Comcast customers are eligible — no matter how “low-income” you are, you can’t decide to reduce your bill by applying for Internet Essentials instead. (Families have been told to drop their Comcast service for 90 days and then try signing up — a terrible hardship for anyone.)"

Whenever anybody pointed out that Comcast's effort was anything less than the pinnacle of nobility, Cohen trotted out a brand of snotty rhetoric that only managed to make the company seem less likable than ever. Case in point from a blog post this week, in which Cohen once again tried to "set the record straight" about the deal benefits:

"And while it may be easy for critics to do this from the sidelines, we would rather try, in the spirit of President Kennedy, to light a candle than to curse the darkness. The reality is that Internet Essentials has been one of the most successful, if not the most successful, private sector initiatives to close the digital divide ever. And it’s not just Comcast that says this; scores of credible civic and community leaders have said the same...But to those critics and business interests that want to take shots at the program, we say join us in the fight against the digital divide to make broadband a reality for all Americans, working together to do more, rather than sniping at cross purposes to run down what has been done."

To be clear here, Comcast is offering a limited number of homes a $10, 5 Mbps down, 1 Mbps up broadband service that costs the company virtually nothing to provide, then behaving as if it had just cured bowel cancer. Meanwhile, the lion's share of the "credible civic and community leaders" supporting the program are usually paid to do so. Most importantly though, Cohen ignores that these amorphous "critics" of the program are the same poor families he breathlessly claims to care so much about. Said critics had to protest in Comcast's hometown of Philadelphia to get Comcast's attention regarding the failures of the program:

"A 10-year-old back-due cable-TV bill for $180 made Hawkins ineligible for the $9.95-a-month Internet Essentials that Comcast publicized as an aid to closing the nation's digital divide - the term for the substantial number of poor people who can't afford $50-a-month Internet service. Hawkins didn't think that was right, and Comcast wouldn't agree to a payment plan. She has a son, Khyrie, then a fifth grader at L.P. Hill Elementary School on Ridge Avenue. "They opened a can of worms with me," said Hawkins, who helped organize a protest in 2012 at Comcast's Center City headquarters to present executives with bologna sandwiches that she thought represented its Internet Essentials program."

Internet Essentials was the very heart of Comcast's Time Warner Cable merger sales pitch, as it shifted the focus away from Comcast's poor customer service reputation and toward Comcast's manufactured image as a champion of diversity, propped up by a chorus of astroturfers on the Comcast payroll. Cohen pitched a laundry list of other imaginary deal benefits that were equally negligible, from hallucinated cyber security improvements to claims the deal would be a boon to creative people everywhere.

But as AT&T found out when it tried to claim that killing T-Mobile would magically increase wireless competition, there actually is a line you can cross when it comes to lobbying bullshit and blistering hubris, even in Washington DC. However, government only respects that line when consumers can be bothered to pay attention, and they were certainly paying attention here after two decades of being abused by one of the least competitive, most apathetic industries in American history.

Filed Under: broadband, david cohen, doj, fcc, merger
Companies: comcast, time warner cable

Comcast Merger Chances Stall As Regulators Realize Comcast Meddled In Hulu Management, Ignored NBC Deal Conditions

from the you-made-your-bed dept

Reports have started to emerge that regulators at the Justice Department may block Comcast's proposed $45 billion acquisition of Time Warner Cable, with DOJ attorneys crossing the t's and dotting the i's before recommending a deal rejection. Comcast is apparently meeting with the DOJ this week as part of a last-ditch effort to save the deal, though leaks have suggested Comcast may walk away from the deal entirely if the merger conditions are too steep (read: actually have them do much of anything for the public interest), including requiring that Comcast sign off on Title II reclassification and the FCC's new net neutrality rules.

Apparently one of the sticking points for regulators during the review was their realization that Comcast failed to adhere to most of the conditions attached to its 2011 acquisition of NBC Universal. It's worth noting that Comcast volunteered most of the conditions attached to that deal. Even then the cable giant failed to adhere to many of them; such as the requirement that they offer and clearly advertise a 6 Mbps, $50 broadband tier for at least three years. An FCC investigation found that the company made the tier difficult to find and sign up for, so Comcast was fined the inconsequential sum of $800,000 for its behavior.

New leaked reports suggest that the DOJ was particularly ruffled by the fact that Comcast ignored NBC deal conditions related to Hulu, which Comcast acquired as part of the deal. Co-owned with Disney and 21st Century Fox, Comcast was restricted from playing a managerial role in the company for fear it would hinder the service's chances at being a truly disruptive Internet video competitor. But DOJ lawyers apparently found that Comcast largely ignored those restrictions, playing a starring role in scuttling the sale of Hulu, out of fear that it would become a more viable competitor to Comcast's services:

"Yet Comcast’s assurances at the Sun Valley meeting played a significant role in how its co-owners evaluated the sale process, people familiar with the other owners’ thinking said. Comcast told its partners it would help make Hulu the nationwide streaming video platform for the cable TV industry, which would boost the site’s growth and make it a stronger rival to Netflix. That influenced Disney and Fox’s decision to call off the sale when the conference was ending, people familiar with those companies’ thinking said. Among the top bidders for Hulu were Comcast rivals DirecTV and AT&T Inc."

We've long noted how Hulu's owners were so afraid of Hulu being truly disruptive, they've hamstrung the service at every opportunity. As such, it's long been little more than a glorified ad for traditional television, with incomplete catalogs and a preponderance of "clips" presented in such a way as to intentionally drive users back to legacy cable. Comcast's involvement post NBC deal certainly helps explain how, despite some executive decisions, the service remains in that role to this day.

It's notably amusing that Disney and Fox actually believed Comcast when it claimed it actually wanted to build Hulu into a Netflix competitor -- by shackling it to the walled-garden mindset of the cable industry. Just as amusing is that Comcast has tried to claim that Hulu is part of a "fierce competitive landscape" that will keep the company in check should regulators approve its acquisition of Time Warner Cable. In other words, Comcast is arguing that a company it intentionally sabotaged to keep from being competitive is a perfect example of the kind of competition that can keep Comcast honest moving forward.

It's possible regulators may still approve the deal, but it seems increasingly likely that if Comcast wants the deal to go through, they may have to sign off on some conditions that are more than just paper mache simulacrum.

Filed Under: doj, merger
Companies: comcast, hulu, time warner cable

70% Of Fans Still Can't Watch LA Dodgers Games On TV Thanks To Time Warner Cable

from the good-job,-team dept

Last year Time Warner Cable and the Los Angeles Dodgers struck a twenty-five year, $8.35 billion deal giving Time Warner Cable the exclusive broadcast rights to all Dodgers games in Los Angeles via its creatively-named regional sports network, Time Warner Cable SportsNet LA. Time Warner Cable then immediately turned around and demanded massive price hikes (rumored to be around $5 per subscriber) for any other pay TV provider that wanted to offer the channel. All of the regional cable operators (including AT&T, Cox, Dish and DirecTV) balked at the hike, resulting about 70% of fans in Dodgers territory being unable to watch the final six games of last season.

All sides had ample opportunity during the offseason to negotiate a fair price, but by all accounts Time Warner Cable simply refused to move on the price tag (though the fact it's in a holding pattern over a Comcast acquisition also likely played a role). As such, the new baseball season kicked off this week and Dodgers fans remain unable to watch their favorite team's games. Making matters worse, Time Warner Cable has refused to seriously answer questions about the logjam, offering some variation of the same statement over and over again:

"We want all Dodger fans to have access to SportsNet LA. Despite our repeated attempts, other providers are unwilling to engage in any discussions. If Dodger fans want to enjoy SportsNet LA this season, we encourage them to switch to a provider that carries the network."

The problem with that logic? Time Warner Cable is the only cable operator offering access to its own sports network, and 70% of Los Angeles lives in an area where they can't get Time Warner Cable. As such, Time Warner Cable's recommendation is not only useless, it's insulting. When that's pointed out, the company just refuses to comment. When asked why it refuses to compromise on the price, the company provides similarly epic non answers:

"SportsNet LA is available on fair terms consistent with its value. We know that the rates for the network owned by this iconic franchise are in line with what other RSN’s around the country charge, including DirecTV’s own regional sports networks."

While it's understandable that Time Warner Cable wants to recoup its investment, the total inflexibility here is pretty well in character for a company that actually has worse customer satisfaction ratings than even the much-hated Comcast. The growing cost of sports programming and the steady increase in annoying retransmission fee dispute blackouts usually help drive cord cutting, but in this case there's absolutely nowhere else to go to watch the content in question. Even over the air broadcasts aren't an option thanks to the nature of the Time Warner Cable, Dodgers arrangement.

So far, regulators have chosen to treat these kinds of programming rate standoffs as just "boys being boys," but it's unclear how much longer they're going to be willing to stand on the sidelines given how much politicians love to earn cheap, sports-related political brownie points. Last year FCC boss Tom Wheeler sent a letter to Time Warner Cable claiming that "inaction is no longer acceptable" and the FCC was "monitor(ing) this situation closely in order to determine whether intervention is appropriate and necessary." But the FCC has said little since. Given that three of the companies involved in the standoff (AT&T, DirecTV and Time Warner Cable) are awaiting merger approval, conditions might be used to force the issue over the next few weeks.

Filed Under: blackouts, deals, dodgers, sports, tv
Companies: comcast, los angeles dodgers, sportsnet la, time warner cable

Comcast Deeply Offended By Claims It Pays People To Support Its Merger

from the pay-no-attention-to-the-man-behind-the-curtain dept

Comcast has consistently crowed about the volume of individuals and organizations that support the company's $45 billion merger with Time Warner Cable. Of course the company has just as consistently failed to mention how much of this "support" is from people paid to regurgitate pretty much any Comcast dreck-filled missive that comes stumbling down the road. Want funding for a new events center or a "closing the digital divide" photo op? Just leave independent thought at the door and send lawmakers a pre-written form letter with your name or organization's logo on it.

It doesn't take much sleuthing to uncover the money trail, because Comcast (and the politicians and groups beholden to it) usually (with some think tank exceptions) don't bother hiding it. They just outright deny that the money impacts policy positions whatsoever. For example, take reports this week that clearly highlight how Comcast can effectively buy a media sound wall of merger support, then pretend there's nothing untoward about an army of "consultants," minority groups, and fauxcademics all paid to effectively be glorified parrots:

"Increased Concentration Does Not Equal Anticompetitive Effect,” Mr. Manne wrote last August, summarizing his submission. He separately wrote pieces in Wired magazine, extolling the virtues of the deal, and through a separate advocacy organization he helps run, called TechFreedom, wrote a blog post that appeared the same day that the deal was announced early last year. Each time, he praised the transaction. But nowhere in these statements does Mr. Manne directly disclose that Comcast is among a small group of donors that finances his nonprofit group, a fact that Mr. Manne confirmed in response to a question late last week. "We are no value to our donors or ourselves unless we maintain our independence and academic rigor,” he said, before adding that “maybe there is some subconscious thing there."

Yes, surely Comcast's cash comes associated not with an expectation that you'll give automated and artificial justification to what's frequently very anti-consumer and anti-competitive policies, but that you'll exercise your "independence and academic rigor" and tell Comcast to piss off when you're approached to help "correct perceptions" about the latest Comcast PR campaign. You see there's nothing untoward going on here -- because we say there's nothing untoward going on here. We're all just healthy American patriots busy expressing our First Amendment rights, after all.

That logic was mirrored by Comcast's top lobbyist David Cohen -- who calls himself the company's "Chief Diversity Officer" to help skirt lobbying rules (I bring that up every time I write about Cohen because to me it just never gets old). Cohen says he's "offended" by the very idea that Comcast has to pay for its policy support:

"He did not dispute that many of the voices supporting the deal received donations from Comcast. But he said he was offended by the suggestion that their endorsements had been made in return for the financial help. "We have never provided financial support to an organization in exchange for support in a transaction,” he said. “Our support is based on the quality of the work they do in the community."

Now I'm sure that somewhere there exists a person that actually believes that, but I'd recommend not putting them in charge of your finances (or even lawn care). In Mr. Cohen's head, this is just another conspiracy contributing to the unfair overall "atmospherics" of anti-Comcast sentiment:

"The atmospherics around our customer service clearly stir some antipathy among some consumers," Mr. Cohen said. "And it does provide a basis for opponents of the transaction to gin up three-sentence, nonsubstantive communications to the F.C.C. saying that they don’t like Comcast or they don’t like Time Warner Cable."

That's a company with arguably the worst customer satisfaction ratings in any industry -- one that manufactures support for bad policies out of thin air -- trying to claim its horrible reputation is somehow manufactured. It's still not clear if regulators plan to deny the merger (or approve it with something vaguely-resembling meaningful conditions), but whatever happens it will spell the end of some fantastic entertainment that easily tops anything in Comcast's channel lineup.

Filed Under: advocates, astroturfing, david cohen, merger, payments, shills, support
Companies: comcast, time warner cable