April 2015

Comcast-TWC Third-Party Documents Off Table

So, now that the Comcast/Time Warner Cable deal is off, what will become of the lawsuit filed by programmers against the Federal Communications Commission's decision to allow third-party access to thousands of programming contract-related documents and work product in the deal?

The US Court of Appeals for the DC Circuit has not yet ruled, but the case involved contracts in both the Comcast-TWC and AT&T-DirecTV deals, so the suit goes on, as does the vetting by the FCC and Justice of the AT&T-DirecTV merger proposal. If the court rules in favor of allowing access, an attorney involved in the suit speaking on background said that they presumed the FCC would not make the contracts related to the Comcast-TWC deal available to those hundreds of third parties since there is no longer any justification for doing so. Public Knowledge, which was one of the outside parties seeking access to the Comcast-TWC documents, said that it considered the request moot now that the deal was off. It did not request access to the AT&T-DirecTV documents.

Regulators React to Comcast Announcement

After Comcast announced it would no longer pursue its acquisition of Time Warner Cable, Washington policymakers responded:

"Comcast and Time Warner Cable’s decision to end Comcast’s proposed acquisition of Time Warner Cable is in the best interests of consumers. The proposed transaction would have created a company with the most broadband and video subscribers in the nation alongside the ownership of significant programming interests,” said Federal Communications Commission Chairman Tom Wheeler. "Today, an online video market is emerging that offers new business models and greater consumer choice. The proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services.”

"The companies' decision to abandon this deal is the best outcome for American consumers," said Attorney General Eric Holder. "The Antitrust Division of the United States Department of Justice has demonstrated, time and again, that it can and will defend the interests of the American consumer no matter the complexity of the issue or the size of the opponent. This is a victory not only for the Department of Justice, but also for providers of content and streaming services who work to bring innovative products to consumers across America and around the world. I commend the Antitrust attorneys and investigators whose outstanding work led to this outcome, and I know that the Department of Justice will continue to fight for fair access and free competition in every industry and every market."

“Comcast’s proposed merger with Time Warner raised antitrust concerns in both the video and broadband markets,” Sen Mike Lee (R-UT) said. “As chair and ranking member of the Judiciary Committee’s Antitrust Subcommittee, Senator Klobuchar and I sent a letter to the Federal Communications Commission and the Department of Justice urging them to carefully review the merger’s effects on competition. I am glad these agencies took our concerns seriously. I look forward to continuing my oversight work with Senator Klobuchar this Congress. We are both committed to ensuring vigorous competition and protection for consumers in this market.”

“Today’s announcement further illustrates the important role that antitrust enforcement continues to play protecting consumers in quickly changing technology markets,” said Sen Amy Klobuchar (D-MN). "Both the Department of Justice’s Antitrust Division and the Federal Communications Commission thoroughly examined the proposed Comcast/Time Warner merger and concluded that the transaction raised serious concerns, including those that Senator Lee and I highlighted last year around the effect on competition. As ranking member of the Antitrust Subcommittee, I will continue to work with Senator Lee to monitor and review potential consolidation in the communications marketplace to protect consumers and preserve competition.”

Sen. Al Franken (D-MN) said, “This is a great day for American consumers. When Comcast's proposal to buy Time Warner Cable was first announced 15 months ago, I came out against it, saying that it would be terrible for consumers. Tens of millions of Americans would have faced higher prices for cable and broadband services, fewer choices, and even worse service. It looked like a lost cause, especially given Comcast's lobbying might: they hired an army of more than 100 lobbyists and spent millions of dollars on advertising to sell the deal. But more and more people came to see it the way that I did and joined the fight. People believe, as I do, that consumers should come first when it comes to technology policy. This was an uphill battle, and I'm enormously proud of our victory.”

"This was a bad idea from the start and although the big cable companies kept telling us it was going to be a good deal for consumers, the public knew better," said Rep Chellie Pingree (D-ME). "Tens of thousands of Americans spoke up and I think it became clear to Comcast they weren't going to be able to get away with making themselves the only cable or Internet provider for millions of Americans. I think the FCC and the Department of Justice did their jobs and heard what the American people had to say..."

Washington Responds to Comcast Announcement

After Comcast announced it would no longer pursue its acquisition of Time Warner Cable, Washington responded:

“This is a huge victory for consumers. If Comcast had bought Time Warner Cable, it would have been able to stop new kinds of innovative video services dead in their tracks. Instead, the Federal Communications Commission and Department of Justice have decided to allow competition to work. New online video services shouldn’t have to ask Comcast for permission to reach viewers or access content. The efforts by the FCC and DoJ in reviewing this deal set a new high bar for the Obama administration in antitrust and public interest review, said John Bergmayer, Senior Staff attorney at Public Knowledge. “Had this deal gone through, Comcast would have become an industry giant with more than 50% of the nation’s broadband connections, dominant in most key media markets. It’s clear that the DoJ and the FCC agreed with the hundreds of thousands of members of the public, consumer groups, trade unions, and private companies that told them there was no way this deal should go forward.”

Free Press President and CEO Craig Aaron said, "This proposed merger was bad news from the beginning. Giving one company control over so much of America's communications is neither pro-consumer nor pro-competition. Everybody knows that. Comcast finally got the message that people can't be fooled into thinking that this merger would benefit cable customers and Internet users in any way. Comcast's failed bid to control Time Warner Cable should be a lesson for the industry. Communications giants should stop trying to create local monopolies and instead focus on competing to provide the fast, affordable and neutral Internet services that so many Americans demand. That's what people say that they want and need. And we're especially grateful to the more than a million Americans who urged regulators in Washington to reject this deal. Credit also goes to those at the Department of Justice and the Federal Communications Commission who have listened to the public and are seriously working to increase competition and lower the costs of access. The demise of this merger, alongside the Net Neutrality victory from earlier this year, mark the rise of Internet users as a powerful political constituency that can no longer be ignored by elected officials and policymakers."

“As we saw in February when the FCC adopted strong rules to protect the free flow of information online, citizen voices can still make a difference in our government’s decision making. More than 800,000 Americans told the FCC that the Comcast/Time Warner Cable merger would be bad for competition and innovation; their arguments were well-founded and have now carried the day. This is their victory,” said Common Cause President Miles Rapoport.

Former FCC Chairman Michael Copps, now a special advisor to Common Cause's Media and Democracy Reform Initiative, said, “Comcast's withdrawal of its proposed merger with Time Warner Cable would be spectacularly good news for consumers concerned about the spiraling cost of cable and broadband and for millions of citizens who want nothing more to do with gatekeeping and consolidation in the communications ecosystem on which our democracy depends."

“This mega merger was a sweet deal for Comcast but a poor one for consumers that would have hurt competition and stifled innovation,” said Ellen Bloom, senior director of federal policy for Consumers Union. “Comcast would have profited handsomely, while consumers ended up paying more and facing fewer choices."

“Today’s announcement is a major victory for consumers and the future of communications in the U.S.,” said Benton Foundation Director of Policy Amina Fazlullah. “With high-capacity broadband growing in importance each day, more and more consumers are realizing that putting 50 percent of the broadband market into Comcast’s control would result in too much power in the hands of one company. Hopefully, moving forward, Comcast and Time Warner will take the path of competition over consolidation and consumers will benefit with more choices, better services, lower prices, and increased innovation.”

“If the media reports are accurate, today is a tremendous victory for consumers, innovators, and the future of the Internet," said Joshua Stager, policy counsel for New America’s Open Technology Institute. "This merger would have given Comcast the power to stifle small businesses, raise consumer prices, and undermine the Internet economy. Americans don’t need a gatekeeper who decides who wins and losses on the Internet — they need affordable, fast broadband and a competitive market. That’s why nearly 1 million Americans, a record-breaking number, have asked the FCC to block this deal."

"The collapse of this dangerous merger would be a giant victory for Latinos, and renew faith in US regulators," said Presente. "[W]e will continue to monitor the situation and strongly oppose the merger until the official withdrawal happens."

“Since the Comcast-Time Warner Cable merger was announced 14 months ago, the WGAW has maintained that it should not be approved because of the irreparable harm it would cause to competition, consumers and content creators," said Writers Guild of America, West President Chris Keyser. "In recent weeks it became clear that regulators had similar concerns. We share with our allied organizations the satisfaction of knowing that this merger has been stopped and that both the public interest and writers’ interests have been protected.”

“Artists of all backgrounds welcome the news that Comcast is abandoning its plan to control even more of our nation's communications infrastructure,” said Future of Music Coalition CEO Casey Rae. “Musicians and independent labels understand what happens when gatekeepers control access to audiences and are allowed to set the economic terms for our participation. We were here at the start of this fight and we’ll remain vigilant to ensure that our creativity has a chance to thrive wherever audiences connect.”

“Families and consumers have won this battle. If Comcast and TWC had merged, it would have created a giant with enormous control over nearly half of all TV sets in the country -- and that union would have inevitably been anti-family and anti-consumer," said Parents Television Council President Tim Winter. "We are glad that the opposition to this merger was so strong and fierce."

“Although the Federal Communications Commission no longer needs to review Comcast’s attempt to supersize itself by acquiring Time Warner Cable, the agency’s work is far from done," said American Cable Association President Matt Polka. "The FCC should acknowledge now that the Comcast-NBCU merger conditions it put in place in 2011 have been ineffective at addressing the harms stemming from the troubling combination of Comcast’s cable assets with NBCU’s content. To protect distributors and consumers from the harms posed by vertical integration, the FCC needs to act on its long-pending program access and retransmission reform rulemakings and adopt ACA’s proposed solutions.”

“Today’s news is the best possible outcome for consumers, who deserve innovative, thriving video and broadband marketplaces," said Jeff Blum, senior VP and deputy general counsel of Dish.

"The decision today reflects the clear consensus among consumers, competitors and policymakers not to Comcast the Internet," said Don't Comcast the Internet, a coalition of competitive video providers including COMPTEL, the Independent Telephone & Telecommunications Alliance and NTCA – The Rural Broadband Association.

"Today is a huge victory for consumers and competition. COMPTEL commends the Department of Justice and Federal Communications Commission for their work on this merger, and we urge them to release their analyses so that all interested parties and the public will fully benefit from the year-long review of the merger," said COMPTEL in its own statement.

Consolidation Lives Despite Comcast-TWC

[Commentary] Cable companies are likely to keep merging as online video options proliferate, the number of cable and satellite TV subscribers slips and costs rise for the shows, sports and movies piped to subscribers. At the same time, there will be more competition for young customers seeking stand-alone Internet and mobile video offerings and cheaper TV channel packages.

"I don't think it's the demise of the cable industry. But its complete dominance of distribution is over," said Randy Giusto, a media industry analyst with advisory firm Outsell. A dropped Comcast-Time Warner Cable deal means a transaction with Charter Communications Inc. aimed to smoothing the way for regulatory approval also falls apart. Charter's bid for Bright House Networks, which it announced in March, could also be killed. Many analysts expect that Charter, which lost out on its bid for Time Warner Cable to Comcast, to resurrect its effort. "Other cable deals that don't involve Comcast might be allowed to go through," former Federal Communications Commission member Robert McDowell said. There "seems to be an antipathy towards Comcast at the FCC" because the agency thinks Comcast didn't stick to the conditions of its acquisition of NBCUniversal, he said.

Comcast may have to look overseas for big cable acquisitions. "Washington's concern here is excessive control of broadband in the hands of a single company," wrote MoffettNathanson analyst Craig Moffett in a client email. "For all intents and purposes, their M&A ambitions would be on ice in the US."

Comcast/Time Warner Cable/Charter Transactions Terminated

Comcast announced that its merger agreement with Time Warner Cable and its transactions agreement with Charter Communications have been terminated. The following is a statement from Comcast Chairman and CEO Brian Roberts: "Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away. Comcast NBCUniversal is a unique company with strong momentum. Throughout this entire process, our employees have kept their eye on the ball and we have had fantastic operating results. I want to thank them and the employees of Time Warner Cable for their tireless efforts. I couldn’t be more proud of this company and I am truly excited for what’s next."

Time Warner Cable Chairman and Chief Executive Officer Robert Marcus said, “We have always believed that Time Warner Cable is a one-of-a-kind asset. We are strong and getting stronger. Throughout this process, we’ve been laser focused on executing our operating plan and investing in our plant, products and people to deliver great experiences to our customers. Through our strong operational execution and smart capital allocation, we are confident we will continue to create significant value for shareholders. I’m extremely proud of the professionalism, dedication and resiliency our 55,000 employees have shown over the past year and thank them for their continued commitment to Time Warner Cable.”

Putting an End to a Bad Comcast Merger

[Commentary] Comcast’s decision to walk away from its $45 billion deal to acquire Time Warner Cable is good news for consumers. A merger of the nation’s two largest cable companies would have created a telecom giant with tremendous power as a gatekeeper to entertainment and the Internet. Comcast said it was moving on, but some of its supporters are sure to blame over-aggressive regulators just as they criticized the Federal Communications Commission’s decision to approve strong network neutrality rules in February. The truth is that the company has a thriving and growing broadband business that has far more customers than competing services offered by phone companies like Verizon and AT&T.

As for Time Warner Cable, the country’s second-biggest cable company, it is well positioned in the markets where it operates. And executives at Charter, the nation’s third-largest cable company, have said that they would be interested in buying Time Warner Cable. Telecommunications is a capital-intensive business, and some consolidation can make sense, if it provides consumers more choices and lower prices by allowing smaller companies to acquire the scale and resources needed to compete with larger corporations. The Comcast deal, however, would have dangerously concentrated market power in a way that could have reduced innovation in a fast-changing industry.

Comcast-Time Warner Collapse Is a Win for TV Networks, Perhaps a Loss for Marketers

The collapse of the Comcast/Time Warner Cable deal is a win for executives at TV networks, but potentially a loss for marketers. TV programmers, including Discovery Communications, had told the Federal Communications Commission that the merger could result in fewer independent voices among programmers. But they also feared the unified company's enhanced clout in negotiations over distribution fees for their signals. And a combined Comcast-Time Warner Cable would give them stronger competition for national advertisers.

The combination also seemed poised to help advance addressable TV advertising, which has been constrained by factors including a lack of broad reach. Most marketers don't want to assemble targeted buys across a variety of regional cable operators, creating a sort of drag on cable companies' push to make their technology in the area better. The merger could have eventually helped expand the addressable universe to the sort of size that big marketers want, fueling the tech race to deliver tools such as household targeting and dynamic ad insertion.

Collapse of Comcast-Time Warner Cable merger shows limits of lobbying

Comcast and Time Warner Cable spent more than $32 million influencing Washington over the past year, in large part to sell its $45 billion mega-merger. In the end, they’re left with a dead deal, a sharp rebuke from regulators, and a harsh lesson that lobbying dollars only go so far. Comcast and its Washington chief, David Cohen, followed the company’s tried-and-true playbook, hoping free-flowing campaign donations and a ground assault could quiet congressional critics and win over the Federal Communications Commission and Justice Department -- much as it had in 2011, when it bought NBCUniversal. Instead, opponents are hailing Comcast’s failed strategy as a welcome sign that money can’t buy everything in Washington.

“Comcast tried to follow the same playbook it used in [NBC], which was the same playbook that AT&T tried to use with T-Mobile, which is just to flood the zone politically,” said Arik Ben-Zvi, a managing director for Glover Park Group, which represented critics of the deal. “And I think what we’re learning more and more is that model of campaigning has real diminishing returns,” he continued. “It’s transparent, it’s easy to expose.”

End the Supreme Court’s Ban on Cameras

[Commentary] Despite countless entreaties over the years from groups calling for “sunshine” and “transparency,” and giant changes in technology and communication, the Supreme Court has been unmoved and still does not allow any live broadcast of its proceedings. Americans should be able to watch their institutions work in real time, just as they do with White House news conferences, congressional hearings and the like. All 50 states permit some audiovisual coverage of court proceedings -- as do the Supreme Courts of Britain, Canada and Australia. The reason the court should allow arguments to be recorded and streamed, however, goes beyond the obvious truth that everyone else is doing it and that the court’s resistance is an unsubtle exercise of naked power. The court should do so because its own First Amendment rulings inevitably lead it there.

[Sherman is a partner at the law firm Boies, Schiller & Flexner]

Can the Defense Department Rekindle Romance With Silicon Valley?

After spending two decades largely ignoring the very Silicon Valley tech start-up culture that it helped bankroll in the 1970s and ’80s, questions remain about a new Defense Department push to reconnect with the California tech world, especially in a post-Snowden era where trust between the two sides has been eroded. Spearheading the new outreach initiative is Secretary of Defense Ash Carter, who after announcing a new cyber and technology strategy at Stanford, plans to hold a series of meetings with tech-related venture capital heads, Facebook execs, and owners of small companies to try and smooth the path for greater collaboration between the military and private industry.

While defense leaders are eager to get into business with Silicon Valley, the Pentagon is hardly the only big government agency looking to make new friends in the region. In an April 22 speech in San Francisco (CA), Homeland Security Secretary Jeh Johnson said his department is also setting up a base of operations in the San Francisco Bay area. The idea is much the same as Sec Carter’s, to build relationships in Silicon Valley and ensure that the government and the private sector take advantage of each other’s research and development spending. Sec Johnson added that he wants to “convince some of the talented workforce here in Silicon Valley to come to Washington.” Sec Johnson also pushed back on the tech industry’s demand for greater encryption, saying that it hinders the government’s ability to detect criminal activity. The trend toward deeper encryption is an issue that “presents real challenges to those in law enforcement and national security,” Sec Johnson said. “We need your help to find the solution.”