[opendtv] Weighing In on a Mega-Merger | Multichannel
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 2 Sep 2014 08:51:35 -0400
http://www.multichannel.com/news/distribution/weighing-mega-merger/383465
Weighing In on a Mega-Merger
WASHINGTON — Comcast can now size up its opposition.
A range of opponents have signalled their displeasure with the largest U.S.
MSO’s proposed $45.2 billion transaction to purchase No. 2 Time Warner Cable
since it was announced in February. Should the two companies consummate the
deal — which Comcast said last week could happen by early next year — it would
result in a mega-MSO with about 30 million subscribers and some 30% of the U.S.
pay TV market.
Now, though, opponents of the deal are on the books at the Federal
Communications Commission — chapter, verse and conditions — and
Philadelphia-based Comcast can plan its counterpunches.
Dish Network, Free Press, the Consumer Federation of America, the Writers Guild
of America West, the Future of Music Coalition, and WeatherNation TV were among
those officially petitioning the FCC to block the deal.
If the agency doesn’t stop the transaction outright, the petitioners want
plenty of conditions. Among the asks were protecting spot cable; making it
easier to hook up third-party modems in Charter Communications systems
(Stamford, Conn.-based Charter will own or manage an additional 5 million
subscribers through transactions related to the Comcast-TWC deal); a la carte;
retransmisson-consent conditions; and a veritable host of others. (See “Strings
Attached,”.)
The deadline for comments from both sides was Aug. 25. Comcast noted that more
than 200 groups and officials have weighed in with their support, but critics
citing everything from Comcast’s size to its sports programming to its control
of the weather, have argued against it.
Comcast received backing from a host of groups that claimed their partnership
with the cable company benefitted minorities, broadband adoption, kids and much
more, going beyond financial support to provide tech support and labor. Some
critics labeled those efforts as buying support for the deal with corporate
contributions.
Many of the merger criticisms centered on the combined companies’ high-speed
Internet subscriber count, with some putting it as high as 60% of the U.S.
broadband market. Comcast said its share of Internet customers was at most
35.5%, and as low as 15% if wireless LTE providers were included.
Comcast has until Sept. 23 to reply to the comments, but executive vice
president David Cohen, who is responsible for shepherding the deal through the
FCC and the Justice Department — as he did with the MSO’s 2011 acquisition of
NBCUniversal — has already weighed in with a lengthy blog post responding to
critics (see “Deal or No Deal,”), saying that some of the programmers critical
of the deal are ones that failed to renegotiate better terms in exchange for
their support.
Here are some highlights from last week’s FCC data drop.
FOES & CRITICS
• Netflix has complained the paid-peering deal it struck with Comcast was
essentially extracted under duress (Comcast disputes this). The over-the-top
video provider said the deal must be blocked, citing interconnection issues
that, in Netflix’s view, should be part of the network-neutrality conversation.
In a voluminous filing, Netflix said the deal is a fundamental threat to the
online video distributor (OVD) industry, creating a company with the size and
motive to foreclose online competition and slow or degrade traffic for
customers who have paid for speed and access.
• Free Press, Public Knowledge, Common Cause, Consumers Union and about 60
other groups said the deal would create a gatekeeper with too much control over
the future of the Internet. They said the merger would “undermine” ownership
and content diversity and that “no amount of promises or conditions would be
good enough to assuage concerns about this merger.” (See “Deal or No Deal,”).
• Dish Network, the No. 2 U.S. satellite-TV provider, said the rosy picture
Comcast and Time Warner Cable have painted of the merger is misleading. The
real picture, Dish said, would show a company with the incentive and ability to
sabotage OVD and traditional video rivals. No conditions would remedy the
“serious competitive harms” of the merger, Dish has said.
• Programmer WeatherNation TV wants the deal blocked because it said the
company would have the ability to foreclose competition in the meteorological
programming space — Comcast has a 25% interest in The Weather Co., owner of The
Weather Channel. It pointed out that The Weather Co. is already both
WeatherNation’s chief competition and a key supplier of video graphics and data
feeds.
• Sinclair Broadcast Group said the FCC must either put conditions on the
Comcast-Time Warner Cable merger — including retransmission-consent conditions
(see chart) — deregulate broadcasters or deny the merger, a combination it said
could drive TV stations out of business. Sinclair has said the deal would
create a company with “unprecedented” horizontal and vertical scale, which it
could use to raise prices, reduce competition, and diminish localism, diversity
and consumer choice.
• No amount of conditions are enough for the Writers Guild of America West, the
union representing TV and online writers, including news writers. “We have
reached a critical juncture in the history of the media, broadband and
telecommunications industries,” WGAW president Chris Keyser said of the filing
last week. “The FCC must put a stop to this spate of merger madness that
threatens every principle of free market economics we deem important.”
FANS
• Urban League of Springfield, Mass., president Henry Thomas praised Comcast’s
Internet Essentials low-cost broadband program and urged the FCC to approve the
deal. “It is hard to find a more effective program to bring Internet to those
young people who depend on access for school work more and more every day,” he
said, welcoming expansion to former TWC systems once the deal is approved.
• The Democratic Municipal Officials Association weighed in to support the
deal, even though Comcast executive vice president David Cohen has said he does
not think municipal broadband is the best way to bridge the digital divide.
“This transaction stands to produce new investment in infrastructure that will
enhance video and Internet service in our communities,” DMO president Cindy
Lerner said.
• TiVo cited Comcast’s history of working with it on retail set-top innovation
as a reason it supports the deal. “TiVo believes that approval of the
above-referenced transaction should benefit consumers that wish to use retail
devices to access their pay TV programming,” the digital video recorder
manufacturer said.
• The Competitive Enterprise Institute, a libertarian public-policy
organization, said the FCC should approve the deal without conditions. The
group said it doesn’t know whether the deal will provide all the benefits
economic theory suggests, but it said it is confident that “the upside of the
deal for consumers is far more promising than its downside is worrisome.”
• Crown Media Holdings, parent of Hallmark Channel and Hallmark Movie Channel,
is one programmer that is fine with the deal. In a letter to FCC chairman Tom
Wheeler that was entered into the docket, Crown Media president Bill Abbott
said Comcast has been “one of the most supportive distributors of unaffiliated
and independent programmers,” and that he believes Comcast- TWC will be a net
positive for Hallmark and other independent programmers.
FENCE-SITTERS
• The National Association of Broadcasters — in a pitched battle with cable
operators over retransmission consent, but counting Comcast’s NBCUniversal
among its members — steered a middle course. It did not comment on the
substance of the deal, but signaled that Comcast was currently in discussions
with some broadcast groups over their concerns.
• The New York Public Service Commission is conducting its own review, and said
it was not ready to take a side. But it also said it thought Comcast and Time
Warner Cable were low-balling the potential for both horizontal and vertical
harms.
• Discovery Communications in July hired a pair of Capitol Hill veterans to
lobby on the deal. “Consolidation raises some real issues here in the U.S. and
everywhere in the world,” CEO David Zaslav said at a Sanford Bernstein investor
conference in May. A Discovery source said company execs were to meet with FCC
officials last week to talk about the transaction, but that it was not filing
comments supporting or opposing it at this time. The source said Discovery
could join in reply comments, which are due Sept. 23.
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