Magazine article Variety

Comcast's Capital Moment

Magazine article Variety

Comcast's Capital Moment

Article excerpt

Many people have chimed in on the plans by Comcast, the nations top cable and Internet provider, to merge with Time Warner Cable, the No. 2 cable operator and No. 3 ISP. But perhaps no one w'as so public as a man who confronted Comcast CEO Brian Roberts during a Q&A session in May. "Comcast is the most hated company in America, according to one recent poll," the man said to Roberts. "What are your incentives in a place like New York to actually compete?"

After waiting for audience laughter to subside, the Comcast topper addressed the question. "Give us a few years," he said. "The incentives are because of competition."

Competition is the question at the heart of the matter, and consumers are not alone in asking it. Hollywood créatives fear a Comcast-TW Cable combo will lead to a cascade of consolidation. Content providers worry that the deal will give outsized leverage to a distributor.

FCC chairman Tom Wheeler, along with the Dept, of Justice tasked with reviewing the proposal, laments the lack of competition in the market for high-speed Internet service.

Yet on Wall Street and among many in Hollywood, the consensus still seems to be that the combination will happen, that the recent history of media mergers points to approval with conditions that try to limit the scope of the combined company's reach. The sentiment is slightly less certain in Washington, where the battle is being played out in public and private.

"If you were a betting person, I would guess that you would say that there is a good chance they will approve the merger with conditions," says former FCC commissioner Michael Copps, who was the sole vote against Comcast's merger with NBCUniversal in 2011. "But I would like to think that with the outpouring of comments on this and with the Open Internet order, that maybe there is more thinking that hey, 'Maybe this is far enough and time to say no.'"

The FCC's next deadline for comments on the merger is Sept. 23, when Comcast is expected to answer to dozens if not hundreds of critical comments from an array of groups and companies including Netflix, the Tennis Channel and Discovery Communications.

Relatively few major media companies have chimed in publicly on the merger. Discovery executives met with FCC officials earlier this month, characterizing their worries as "critical issues." According to sources who have been contacted, the FCC and the Justice Dept, are reaching out to studio executives and other industry leaders to get their take on the merger in private, reflecting the concern that to air criticisms in public would risk future negotiations with Comcast.

Some media companies have inked carriage agreements that have seemingly turned their past criticism of the deal to tacit acceptance. In April, Univision CEO Randy Falco said that the merger was bad for competition. Earlier this month, Univision announced a long-term pact for Comcast to carry its Spanish-language sports network, and stayed silent when it came to filing official public comment to the FCC..

Comcast feels it already has addressed many of the critical comments, with company exec VP David L. Cohen citing that "the number of video, broadband and phone providers in every local market in the country will remain the same post-transaction as today."

Nationally, Comcast says the combined entity still will have less than 30% of the pay-TV market and not quite 36% of the wired broadband market - not enough to raise serious competitive concerns, it maintains.

Yet privately, industry investors and studio executives express the fear that the merger marks a turning point that will tilt leverage clearly in Comcast's favor, with greater power to set pricing and carriage terms. With dominant positions in New York and Los Angeles, Comcast will hold the cards when it comes to reaching the viewers advertisers crave.

That prospect will force others to play the combination game. Lined up on the runway behind Comcast-TW Cable are AT&T and DirecTV, and the belief is that further consolidation on the distribution side will lead to mergers on the content side. …

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