What Went Wrong For Comcast… And Right for America

April 29, 2015
April 29, 2015

What Went Wrong For Comcast… And Right for America

When it was announced in February 2014, the conventional wisdom on Comcast’s plan to acquire Time Warner Cable was that the merger would be approved, perhaps with conditions similar to those imposed on its last acquisition of NBC Universal. Instead, after completing their reviews, the DOJ and FCC escorted Comcast to the nearest exit and cut the cord on their merger.  

What can be learned from this dramatic shift in merger sentiment and outcome?  

The most significant obstacle to the merger turned out to be Comcast’s colossal miscalculation that the national broadband market doesn’t matter – or worse, isn’t even a relevant market. From the day it announced its deal, Comcast stuck to its basic talking points claiming that only local markets mattered, that there would be no overlap between the two merging companies, and dismissed any suggestion that there was a national broadband market affected by the deal. Meanwhile, Netflix and many other programmers, over 1,000 competing broadband network providers, and consumers and public interest organizations, made a compelling case against the deal that Comcast failed to rebut. They raised concerns that Comcast’s post-merger share of the national broadband market would jump to well over 50%, and threatened to be a serious bottleneck for over the top (OTT) content providers, their consumers and an increasingly broadband-dependent economy. 

In the end, Comcast wasn’t nimble, didn’t adapt and lost the argument over the merger’s relevant market and impacts by a landslide, a fatal defeat in any antitrust review. We are proud that the Los Angeles Times recognized our Don’t Comcast the Internet Campaign, led by COMPTEL, NTCA–The Rural Broadband Association and ITTA, as a driving force in the successful effort to stop the merger.  

Another major shortcoming for Comcast was its failure to articulate significant benefits of the merger and to generate support from Members of Congress or third parties who would give voice to these outcomes. Indeed, several reporters mentioned to us over the course of the deal that it was striking how little Congressional support Comcast generated for this transaction after leveraging quite a bit for its NBCU acquisition. Comcast senior executive, David Cohen, certainly did not help his own case when he candidly commented:  “We’re certainly not promising that customer bills are going to go down or even increase less rapidly.”

With few benefits and little organic backing, Comcast tried to use its financial muscle to manufacture the perception of widespread support, only to have this backfire when The New York Times published an exposé revealing that the Company spent millions on donations to more than 80 civic groups, each of whom dutifully filed comments with the FCC in support of their donor. Comcast’s “Astroturf” was clearly no match for the unprecedented opposition the merger faced, which by the end numbered about 800,000 hostile comments to regulators, making it the most opposed merger in history.

Last, corporate reputation may not play much of a role in some mergers, but in those involving well known consumer-facing companies, Comcast’s failed merger may come to stand for the large handicap faced by businesses with reputations so poor that the mere mention of their name provokes disdain.  This past December, the University of Michigan’s Consumer Satisfaction Index found that Time Warner Cable and Comcast were the two most unpopular companies in America. In our own research, we found that the prospect of Comcast doing to the Internet what it already had done to cable TV provoked universal and passionate opposition to the merger. Consumers strongly opposed putting more control in the hands of these companies over their online programming options. These findings gave rise to our campaign name, Don’t Comcast the Internet, and these very real fears ultimately brought an end to this merger.  

The good news is that Comcast’s defeat is a very important win for competition and consumers as it helps to keep the market for broadband access more open and vibrant. But all those who have a stake in the broadband-dependent economy should remain vigilant, as there surely will be follow on efforts to “Comcast” the Internet.


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Written by clsdcadmin On the

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