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

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

AT&T's Cozy NSA Ties Brought Up In Attempt To Scuttle DirecTV Merger

from the what-repercussions? dept

Before there was Edward Snowden, there was of course the notably less celebrated Mark Klein. As most of you probably recall, Klein, a 22-year AT&T employee, became a whistleblower after he highlighted (pdf) how AT&T was effectively using fiber splits to give the NSA duplicate access to every shred of data that touched AT&T's network. Of course, once it was discovered that AT&T was breaking the law, the government decided to just change the law, ignore Klein's testimony, and give all phone companies retroactive immunity. It really wasn't until Snowden that the majority of the tech press took Klein's warnings seriously.

AT&T's been loyally "patriotic" ever since, often giving the government advice on how to skirt the law or at times even acting as intelligence analysts. Business repercussions for AT&T have been minimal at best; in fact, you'll recall that Qwest (now CenturyLink) claimed repeatedly that government cooperation was rewarded with lucrative contracts, while refusal to participate in government programs was punished. In fact, the only snag AT&T's seen in the years since was to have its European expansion plans thwarted, purportedly by regulators uncomfortable with the carrier's cozy NSA ties (AT&T instead simply expanded into Mexico).

Fast forward a few years and The Hill is now claiming that AT&T's relationship with the NSA could harm the company's $48 billion attempt to acquire DirecTV. This claim is apparently based on the fact that a coalition of AT&T business partners, called the Minority Cellular Partners Coalition, is warning the FCC in a letter (pdf) that AT&T's enthusiastic voluntary cooperation with the NSA shows the company's total disregard for consumer privacy.

"(Despite immunity) the Commission is still obliged to execute and enforce the provisions of § 229 of the Act, see 47 U.S.C. § 151, and it is still empowered to conduct an investigation to insure that AT&T complies with the requirements of CALEA. See id. § 229(c). And the Commission is obliged to determine whether AT&T is qualified to obtain DIRECTV’s licenses in light of its egregious violations of CALEA. This is particularly true given AT&T’s continued and ongoing pattern of misconduct. Accordingly, the Commission should investigate AT&T’s complicity in the PSP to determine whether AT&T engaged in unlawful conduct that abridged the privacy interests of telecommunications consumers on a vast scale and, if so, whether AT&T is qualified to obtain DIRECTV’s licenses."

Of course, that's simply not happening. While the NSA cooperation can be used as a broader example of AT&T's character (like the repeatedly nonsensical claims the company makes when it wants a merger approved, or how AT&T tries to charge its broadband customers extra for no deep packet inspection), it's incredibly unlikely that the same government that granted AT&T's immunity will turn around and sign off on using AT&T's behavior to squash a merger. If the merger is blocked, it will be due to more practical considerations -- like the fact that DirecTV is a direct competitor to AT&T and eliminating them would lessen competition in the pay TV space. When it comes to AT&T's relationship with the NSA, it's pretty clear by now that these particular chickens may never come home to roost.

Filed Under: merger, nsa, privacy, surveillance
Companies: at&t, directv

Comcast Caught Ghost Writing Politicians' Merger Support Letters

from the I-let-a-cable-giant-do-my-thinking-for-me dept

In a recent blog post, Comcast's top lobbyist David Cohen proudly proclaimed that Comcast has been seeing a "wide variety" of support for the company's $45 billion takeover of Time Warner Cable. Though most people worry that an even larger Comcast means more usage caps, greater anti-competitive leverage in content negotiations, less media diversity and worse customer service than ever before, Cohen crowed that 70 mayors, 80 chambers of commerce and business organizations and over 60 other state and local officials think the deal is a wonderful idea.

What Cohen accidentally forgot to mention is that in most instances, that support is paid for and, quite frankly, entirely phony. The Verge this week did a nice job using public records requests to highlight how Comcast has been busy ghost writing merger support letters for lazy politicians. Said letters, as you'd expect, ignore the company's abysmal customer service reputation and downright disdain for the American consumer, instead insisting that Comcast is a pillar of the community. Like this gushing missive from Mayor Jere Wood of Roswell, Georgia, which The Verge notes was actually written by a Comcast VP of External Affairs:

"When Comcast makes a promise to act, it is comforting to know that they will always follow through," Wood's letter explained. "This is the type of attitude that makes Roswell proud to be involved with such a company," the letter asserts, "our residents are happy with the services it has provided and continues to provide each day."

Of course, this is something happening in every industry, every day, though Comcast's behavior is getting extra attention of late because the company's extreme unpopularity has become a hit magnet for many technology blogs (kind of the reverse Apple effect). When asked about the practice, Comcast would only state that it's not that big of a deal because the recipients of these letters have the choice to edit them or not use them at all:

"In response to a list of questions from The Verge, Comcast emphasized that it did not have final say in the substance of the letters. "We reached out to policy makers, community leaders, business groups and others across the country to detail the public interest benefits of our transaction with Time Warner Cable," Sena Fitzmaurice, a Comcast spokesperson, said in an email. "When such leaders indicate they’d like to support our transaction in public filings, we’ve provided them with information on the transaction. All filings are ultimately decided upon by the filers, not Comcast."

In other words, throwing campaign contributions at politicians and doing the thinking for them isn't a big deal because it's up to those specific politicians not to be used in such a fashion. Everyone feel better about the state of the union?

Comcast probably should tread carefully if it values the deal it has spent the last year pitching. When AT&T was trying to acquire T-Mobile, we noted how the company went completely off the rails when it came to using astroturf and other farmed support to try and convince regulators that eliminating T-Mobile would somehow create jobs and increase competition. Regulators found themselves so awash in bogus enthusiasm and phony math that it actually contributed to a rejection of the deal. AT&T executives of course learned nothing from the experience and kept lying after the fact.

Both mergers highlight how giant telecom companies like AT&T, Verizon and Comcast have been so pampered by government for so long, they know the rules (of logic or otherwise) simply do not apply to them. As such they've been writing not only letters but law for corrupt state legislatures for more than a generation, and have seen absolutely no repercussions for decades of distortions and outright falsehoods. Thanks to the recent rise in digital activism, the press and public have started paying closer attention to telecom issues, though companies like AT&T and Comcast have pretty clearly failed to notice.

Filed Under: david cohen, foia, ghostwriting, lobbying, mayors, merger
Companies: comcast, time warner cable

Comcast Lobbyists Give Lawmakers Golden Tickets: Secret Phone Numbers To Reach Good Customer Service

from the giving-a-damn-is-a-special-perk-just-for-you dept

Comcast has certainly been pulling out all the stops to get its $45 billion acquisition of Time Warner Cable approved by regulators. That has involved calling everyone who opposes the merger ignorant and unreasonable, paying minority groups to parrot the company's positions, and generally repeatedly denying all of the competitive and monopsony concerns raised by deal critics. All while the company's top lobbyist, David Cohen, busily dodges lobbying rules by pretending he's not actually lobbying (he seriously calls himself the company's "Chief Diversity Officer").

Comcast has employed some forty lobbying firms to court DC politicians, and offered up cash donations to 32 of the 39 members of the House Judiciary Committee that recently held hearings on the merger. In a piece exploring how David Gregory lost his job on "Meet The Press," (and the rise of Comcast's David Cohen as a K Street powerhouse) the Washingtonian points out that Comcast lobbyists have also been busy handing out special "VIP cards" to DC lawmakers. These cards feature a single-use phone number that will prioritize your customer support call:

"Comcast also had an even more personal way of sucking up to Washington. Its government-affairs team carried around “We’ll make it right” cards stamped with “priority assistance” codes for fast-tracking help and handed them out to congressional staffers, journalists, and other influential Washingtonians who complained about their service. A Comcast spokeswoman says this practice isn’t exclusive to DC; every Comcast employee receives the cards, which they can distribute to any customer with cable or internet trouble. Nevertheless, efforts like this one have surely helped Comcast boost its standing inside the Beltway and improve its chances of winning regulatory approval for its next big conquest: merging with the second-largest cable provider in the country, Time Warner Cable."

Comcast's customer service is, as we've noted a few times, historically awful. As in, surveys show it's worse than nearly any other company in any other industry, which is no small feat. Comcast CEO Brian Roberts frequently complains that this is simply because the company's so large, and that statistically you're simply going to have a lot of squeaky wheels. So amusingly, in addition to throwing cash at DC lawmakers, Comcast is using actually giving a damn about your customers (or the illusion of giving a damn, as Comcast employees tell me these cards are common and don't actually do all that much) as a "special perk" you can only get if you're immeasurably annoyed with the company -- or a DC lobbyist that can help it out.

What's the over/under on a larger Comcast someday waking up and realizing that the company should focus on giving everybody decent customer service?

Filed Under: customer service, david cohen, lawmakers, lobbying, lobbyists, merger, policymakers, vip
Companies: comcast, time warner cable

NY Politician's Letter Supporting Comcast/Time Warner Cable Either Written By Comcast Or Plagiarized From Comcast

from the or,-i'm-sure-it-could-just-be-a-big-coincidence...-right? dept

It's no secret that politicians will often... er... "repurpose" legislation and talking points handed to them by companies. In some cases, they're even willing to admit who really wrote things. But, more generally, they at least try to hide it. However, sometimes they don't try very hard. NY State Assembly Leader Joe Morelle recently decided to send a letter expressing his support for the merger between Comcast and Time Warner Cable. Fair enough. But the folks over at Stop The Cap noted that much of the letter appeared to be word for word identical to Comcast's David Cohen's Congressional testimony and Comcast press releases. This leaves a few possible explanations:

1. Comcast wrote the letter.
2. Joseph Morelle (or some poor intern he has) is a really bad plagiarist, who happens to only use Comcast's own material as source material.
3. It's all a big coincidence. Only so many words out there, right?

I guess there could be a few other options as well, but they're mostly escaping me at this point... Either way, the similarities noted by Stop the Cap:

N.Y. State Assembly Leader Joe Morelle: “The combination of Comcast and Time Warner Cable will create a world-class communications, media and technology company to help meet the increasing consumer demand for advanced digital services on multiple devices in homes, workplaces and on-the-go.”

David Cohen, executive vice-president, Comcast: “The combination of Comcast and TWC will create a world-class communications, media, and technology company to help meet the insatiable consumer demand for advanced digital services on multiple devices in homes, workplaces, and on-the-go.”

---

Joe Morelle: “Comcast has a proven record of investing in new technologies, facilities and customer support to provide the best in broadband Internet access, video and digital voice services.”

David Cohen: “Comcast has a proven record of investing in new technologies, facilities, and customer support to provide the best in broadband Internet access, video, and digital voice services.”

---

Joe Morelle: “Similarly, TWC has made significant strides in offering a diverse array of video, broadband, and voice services to its customers.”

David Cohen: “Similarly, TWC has made significant strides in offering a diverse array of video, broadband, and voice services to its customers.”

---

Joe Morelle: “Combining the two companies’ complementary strengths will accelerate the deployment of next-generation broadband Internet, video and voice services across the new company’s footprint.”

David Cohen: “Combining the two companies’ complementary strengths will accelerate the deployment of next-generation broadband Internet, video, and voice services across the new company’s footprint.”

---

Joe Morelle: “Residential customers will benefit from technological innovations including a superior video experience, higher broadband speeds and the fastest in-home Wi-Fi, while also generating significant cost savings and other efficiencies.”

Comcast Press Release: “Through this merger, more American consumers will benefit from technological innovations, including a superior video experience, higher broadband speeds, and the fastest in-home Wi-Fi. The transaction also will generate significant cost savings and other efficiencies.”

---

Joe Morelle: “In just two-and-a-half years, over 350,000 families, representing approximately 1.4 million low-income consumers, have been connected to the Internet thanks to this program. This proposed merger would extend this vital program to many more low-income households in New York by providing access to it in certain areas of the state currently only served by Time Warner.

David Cohen: “In just two and a half years, over 300,000 families, representing some 1.2 million low-income consumers, have been connected to the transformative power of the Internet thanks to this program. The transaction will extend this vital program to millions more Americans in the areas currently served by TWC.”

Yeah, I'm sure it's all just a completely random coincidence...

Filed Under: david cohen, joe morelle, lobbying, merger, new york, plagiarism, talking points
Companies: comcast, time warner cable

Comcast, Time Warner Cable Spend Big To 'Honor' FCC Commissioner Overseeing Their Merger Review

from the soft-corruption dept

We've written in the past about the idea of "soft corruption," in which the direct exchange of money isn't necessarily obvious, but the very clear appearance of conflicts of interest certainly erode the trust of the public in the policy makers. Even when everything is technically above-board, these actions attack the credibility of the policy process. Witness the latest example. Comcast and Time Warner Cable are each shelling out significant cash to "sponsor" an event which is honoring FCC Commissioner Mignon Clyburn who, of course, is in the midst of a review over the merger proposal between the two companies. As Politico reports:

Comcast will pay $110,000 to be a top-level “presenting sponsor” at the Walter Kaitz Foundation’s annual dinner in September, at which Clyburn is receiving the “diversity advocate” award, according to a foundation spokeswoman. Time Warner Cable paid $22,000 in May to the foundation for the same event, according to a Senate lobbying disclosure filed at the end of last month. The foundation supports diversity in the cable industry.

Diversity is a good thing and we're all for it. It's also great that Comcast and TWC want to "support" diversity. But the questionable optics here are quite troubling -- even if it's technically legal:

There are no rules preventing businesses from helping to honor regulators in this way, and both companies say they have supported the foundation for years.

Comcast further claims that it's "insulting" to suggest that its donation here has anything to do with Clyburn being honored at the event. And, indeed, Comcast has sponsored similar events from the same group, giving similar amounts -- all while past honorees tended to be industry insiders, rather than public sector officials. So it's doubtful that this is any sort of direct tit-for-tat type payment. But, again, that's part of what's so troubling about the nature of "soft corruption." There's still a pretty clear conflict of interest in the entire setup which -- whether true or not -- creates the perception that people in the public sector are in debt to the very companies they're supposed to be regulating.

Filed Under: awards, conflict of interest, fcc, merger, mignon clyburn, soft corruption, sponsorship
Companies: comcast, time warner cable

Congressional Reps Signing Sympathy-For-The-Cable-Industry Letter Received More Than Twice As Much Funding From Cable Lobbyists

from the the-original-'pay-for-play' dept

As the ongoing net neutrality/internet fast lane issue continues to be debated by the FCC and many other interested parties, it's always helpful to know where your representatives stand on issues related to this battle.

One of the issues being considered by the FCC is the reclassification of internet service as a public utility under Title II. This sort of regulation is obviously opposed by major internet service providers, who aren't exactly smitten with the idea of being held accountable on price or service quality by a government agency.

Maplight.org has researched the political contributions flowing to the 28 Congressional representatives who signed letters opposing this particular part of the FCC's proposed rule changes and found that -- surprise! -- cable companies put far more money into the pockets of those who side with them on this issue.

The 28 representatives signing letters to the FCC against Title II reclassification of the internet as a public utility, a position allied with the cable industry, have received, on average, $26,832 from the cable industry, 2.3 times more money than the average for all members of the House of Representatives, $11,651.

Republicans seem to be asking for more in return for sympathetic letter-writing.

Republicans signing the letters against Title II reclassification of the internet as a public utility have received, on average, $59,812 from the cable industry, 5 times more than the average for all members of the House, $11,651.

In fact, Maplight notes that the top five recipients among letter signers are all Republicans. Evidence indicates that the spendthrift lobbyist may be better off contributing to Democrats.

Democrats signing the letters against Title II reclassification of the internet as a public utility have received, on average, $13,640 from the cable industry, 1.2 times more times more than the average for all members of the House, $11,651.

Maplight also points out that there's an additional layer of self-interest at play as well. According to its research, 29 members of Congress own stock in Comcast, making it the 25th most popular stock in the Congressional market.

The letter warns that this additional regulation will "stifle innovation" and "halt job creation." Comcast's FCC filing is even more succinct in transparent self-interest:

Title II would spark massive instability, create investor and marketplace uncertainty, derail planned investments, and slow broadband adoption.

I'd love to hear more about Comcast's "planned investments" that don't include funneling funds into politician's pockets or swallowing another large cable company, but the filing contains none of these insights. Like the infamous "fiber-to-the-press-release" announcements, any claim of "instability" or curbed "investments" tends to be nothing but enraged puffs of hot air.The company's true aim still seems to be figuring out how it can make more while doing less.

Filed Under: cable, congress, lobbying, merger
Companies: comcast, time warner cable

Getting Bigger For Bigness' Sake: AT&T Announces Deal To Buy DirecTV, A Deal That Even Confuses Wall St.

from the well-we-gotta-buy-something dept

This has been rumored for a bit, but over the weekend AT&T officially announced plans to buy DirecTV for $50 billion. DirecTV is one of the companies perpetually being bought and sold (or rumored to be). The company has been involved in more aborted mergers than I can remember. Either way, while Wall Street folks often like just about any merger announcement (mergers and later spinoffs are great moneymakers for the banks), even it has been scratching its head at this particular deal. At best, it seems like a sort of reaction to Comcast-Time Warner Cable and an attempt to get bigger for the sake of bigness. Though, of course, it's getting bigger in a pretty saturated market (and one that is actually on the decline due to cord cutting). Perhaps it's an admission that AT&T's own TV service, Uverse, just hasn't done that well. Or maybe it's just an admission that AT&T is swimming in too much cash.

Either way, if both this and the Comcast/TWC merger go through, then we'll have an almost complete duopoly on pay TV. Congress wasted no time in announcing that hearings will have to be held about the potential merger, and, as with the Comcast deal, expect months of puffed up rhetoric and questionable op-ed pieces, as lobbyists work over time to make sure the deal happens. Of course, there is another way that the public can make their own statement on all of this: cut the cord and stop relying on terrible pay TV deals that really just aren't worth it any more.

Filed Under: acquisition, merger, pay tv, satellite
Companies: at&t, directv