Staff attorneys that have reviewed details of the Time Warner Cable/Comcast merger proposal are prepared to make a recommendation as early as next week that the Department of Justice should block the deal because it is anti-competitive and anti-consumer.

The staff in the Justice Department’s antitrust division have spent more than a year reviewing documents submitted by both cable companies to determine what impact the merger would have on the cable television and broadband landscape.

Bloomberg News today reported the attorneys did not like what they saw and believe the merger would harm consumers. For the first time, a cable company merger deal was reviewed not so much for its impact on cable television programming, but on broadband.

When the Federal Communications Commission redefined broadband as an Internet connection of at least 25Mbps, Comcast suddenly found itself the largest broadband provider in the country. If the merger with Time Warner Cable is approved, Comcast will have a 56.8 percent market share of U.S. broadband customers, far exceeding any other provider.

In upstate New York, Comcast would have more than a 75% market share — nearly 9o% if you just consider non-Verizon FiOS areas. In California, Comcast would control more than 80% of the market, not only picking up Time Warner Cable customers, but Charter customers in Southern California as well. 

Comcast and Time Warner Cable have argued competition is not affected because the two companies never compete with each other. But a de facto broadband monopoly could allow Comcast to raise rates at will and bring a return to usage-related billing. It would also discourage new competitors from entering the market – particularly those relying on broadband to deliver video services, and hand Comcast more leverage to force compensation from online content companies like Netflix.

Under consideration by the Justice Department:

• Whether the combined entity would have too much control over nationwide broadband Internet delivery;
• whether Comcast could use its financial influence to strike exclusive cable deals that could keep programming off other platforms;
• whether Comcast could limit how programming is delivered through video streaming services (usage caps, etc.);
• if Comcast complied with terms under a previous merger deal with NBCUniversal.

Renata Hesse, a deputy assistant attorney general for antitrust, will take the analysis and ultimately decide, along with the division’s top officials, whether to file a federal lawsuit to block the deal. Bloomberg reports lawyers at the Justice Department have contacted outside parties to collect evidence to strengthen their potential case against the merger.

Another clear sign the merger is not being received well inside the Justice Department and the Federal Communications Commission is a complete lack of negotiations with Comcast over possible concessions to make the deal less anti-competitive. That also happened with the AT&T/T-Mobile merger where negotiations to ease anticompetitive concerns never seriously got off the ground before the Justice Department sued to block the deal. The FCC quickly announced its own opposition later that same day.

A lawsuit does not necessarily kill the merger deal. Comcast could take its case to federal court to win approval over the objections of the Justice Department. The company might also counter-propose new concessions to address concerns raised by the lawsuit. 

After learning of today’s Bloomberg News story, spokespeople at both Comcast and Time Warner Cable are either confident or in denial:

“There is no basis for a lawsuit to block the transaction,” said Sena Fitzmaurice, a Comcast spokeswoman. The merger “will result in significant consumer benefits — faster broadband speeds, access to a superior video experience, and more competition in business services resulting in billions of dollars of cost savings.”

Time Warner Cable spokesman Bobby Amirshahi said “we have been working productively with both DOJ and FCC and believe that there is no basis for DOJ to block the deal.”

Californians get a reprieve from the menacing Comcast-Time Warner Cable merger with an announcement from the California Public Utilities Commission it is putting further consideration of the merger deal on hold until later this spring.

Consumer groups loudly protested the PUC for holding its single public hearing on the merger in San Francisco, which has been served almost exclusively by Comcast for years. Most of the impact of the merger will be felt in Los Angeles, where Time Warner Cable provides service to around 1.8 million customers. The deal also involves Charter Communications customers in the region, who will also end up as Comcast customers if the deal is approved.

The PUC eventually agreed to hold a meeting in Los Angeles, but then scheduled it for Good Friday. Now it has changed the date for the four-hour public input session to April 14, one day before tax returns are due. No specific information about the time of the meeting could be located on the CPUC website, but we do know it will be held in the auditorium of the Public Utilities Commission’s building at 320 West 4th St. in downtown Los Angeles.

That the CPUC seems to be heading towards approving the deal does not come as much of a surprise. The CPUC has been surprisingly friendly to the communications companies it regulates, in the past approving questionable statewide video franchise reforms on behalf of AT&T and generally permitting most of the merger and consolidation transactions that arrive at the commission for review.

An advising administrative law judge attached a long list of recommended temporary conditions that should be included in any approval, covering everything from lobbying about municipal broadband to discount Internet service for the poor. Although Comcast claims it is willing to accept many of the short-term conditions, it also signaled objections to some of the most significant requirements, a potential sign Comcast might exercise its legal options in the future to be rid of the deal’s most onerous conditions.

Independent consumer groups not financially aligned with the cable industry are almost universally opposed to the merger as are many Californians.

Charter Communications is in talks with Si Newhouse, Jr., the billionaire owner of Bright House Networks, to acquire the cable operator in an all-stock deal that could be worth over $12 billion, according to a report by Bloomberg News.

Bright House Networks serves 2.5 million customers, primarily in central Florida but also in parts of Alabama, Indiana, California and Michigan. Bright House has been closely controlled by the Newhouse family and has avoided efforts to consolidate the cable industry for more than two decades.

The deal is not yet finalized, according to two people asking not to be identified discussing confidential details of the deal. A side dispute over who will control voting shares of Charter after any acquisition remains at issue. John Malone’s Liberty Broadband, the largest single shareholder of Charter, is said to be seeking a larger ownership share of Charter Communications in what analysts expect will be a gradual takeover of Charter by Malone.

This afternoon, Bright House confirmed acquisition talks are underway.

“While we have had conversations with many parties about this transaction, we do not have an agreement with anyone regarding future plans for Bright House,” a company spokeswoman said in the statement.

The deal may also depend on whether regulators approve the merger of Comcast and Time Warner Cable. Time Warner Cable currently represents Bright House in most cable programming negotiations and the two cable companies have closely worked together on technology and services for more than a decade. That collaboration is likely to end if the Comcast merger is approved, stranding New House as a small independent operator.

Charter was long-expected to make offers to acquire other cable operators in its quest to grow larger, especially after failing in its bid to acquire Time Warner Cable for itself. An acquisition of Bright House by Charter would allow the company to further expand its presence in the south and midwest where it focuses most of its cable operations.

But it is not a done deal yet. The talks between Charter and Bright House could still fall apart and may not result in a deal, one source cautioned.

[flv]http://www.phillipdampier.com/video/Bloomberg Charter in Talks to Buy Newhouse Bright House Networks 3-12-15.flv[/flv]

Bloomberg News reports Charter Communications is in talks with the Newhouse family to acquire Bright House Networks in an all-stock deal. (1:22)

Image from the Philadelphia Daily News

Comcast customers in Philadelphia, home to Comcast’s world headquarters, get no better treatment from the cable company than anyone else. But customers in the city of Brotherly Love now at least have a small edge on the rest of America.

A Philadelphia Daily News columnist just so happens to have the direct phone number of Comcast CEO’s 92-year old mom and is willing to use it.

“I grew up in a neighborhood where even the really bad kids could be brought back in line when someone tattled on them to their moms,” wrote columnist Ronnie Polaneczky. “That’s why I picked up the phone and called the 92-year-old mother of Comcast Corporation’s chairman and CEO Brian Roberts. We all know that Roberts’ company has been very, very bad. Comcast is in the news every other day with another irate customer’s tale of horrible treatment from the behemoth cable provider.”

Polaneczky decided to use the nuclear option after reading an email sent by Diana and Jason Airoldi, recent Philly transplants from Washington, D.C. The Airoldi’s had an appointment with Comcast to install service Dec. 23. It was now Feb. 1 and after multiple broken promises they were still waiting.

“In almost the same amount of time it took Noah to float the Ark, the country’s biggest cable company and home Internet-service provider hasn’t been able to turn on the Internet and cable in the Airoldis humble South Street apartment,” the columnist noted.

But they were by no means alone. There were also sad stories from:

• Sandy and Charles Arnold, who have tried since Dec. 14 to get Comcast cable and Internet at their Ocean City home;
• Bridie Gallagher, a senior citizen who has tried for months to get the overcharge on her bill fixed;
• And Christine Yelovich, whose odyssey into the Comcast’s multiple circles of service hell should only be told with a horror-movie soundtrack playing behind it.

Answer: Call Mama

Suzanne Roberts, the 92-year old mother of Brian, accomplished more for the Airoldi family in one day than the entire Comcast juggernaut could manage in more than a month. By day’s end, the Comcast trucks descended on the neighborhood and the family was finally connected.

Unfortunately, Comcast does not offer 1-800-SUZANNE for beleaguered customers, who have developed a seething dislike for the cable company. One horror story after another, accompanied by news of PR disasters that routinely spread across the country faster than measles all testify to Comcast’s bottom of the barrel customer ranking as among the most hated companies in America.

Even PR damage control marketing experts now consider Comcast hopeless.

“The stories that come out about them are just unbelievable in terms of the torture – not just bad service, but torture – they inflict on customers,” said Chris Malone, managing partner of Fidelum Partners in Newtown Square, a specialist in fixing the reputations of companies that shoot themselves in the proverbial foot. “I feel quite confident that if their services were offered more broadly, their ranking would be much lower.”

Malone told Polaneczky the reason more Americans hate Comcast than BP — the company that threatened the Gulf of Mexico’s entire ecosystem after recklessly allowing more than 200 million gallons of oil to spill and stain the beaches from Louisiana to Florida — is the cable company’s relentless greed.

‘At the root of Comcast’s problem,’ Malone says, is that ‘the company is focused on maximizing financial benefits at the expense of its customers and employees,’ who know that “the company does not have their best interests in mind.”

Even Comcast’s new customer service czar, Charlie Herrin — head of “customer experience,” hired to “ensure that we are delighting our customers at each touch point,” has waved the white flag, seemingly admitting the company is an unmitigated mess.

Despite annual commitments from Comcast management starting in 2007 that Comcast was “redoubling” its efforts at improving customer service, the pesky fact that twice nothing is still nothing left Herrin sheepishly lowering expectations:

“In fact,” Herrin said, “it may take a few years before we can honestly say that a great customer experience is something we’re known for.”

A few years?

Polaneczky

These facts should be penetrating the offices of every state and federal regulator contemplating the public interest benefits of approving a merger deal between Comcast and Time Warner Cable. Sweeping aside the Comcast-ghostwritten letters non-profit, civil rights, and political groups have sent to regulators (while running to the bank to cash Comcast’s checks), the columnist for the Daily News is scratching his head pondering why anyone would even think of letting the bad become bigger to get even worse.

“If Comcast is badly serving so many customers now, why should it be allowed the opportunity to badly serve millions more?,” she asked. “After my column ran, I got a call from Jeff Alexander, the regional spokesman for Comcast’s local operations. He apologized for what had happened to the Airoldis and invited me to visit some of Comcast’s shiny new retail stores, where customers can pay bills, return cable boxes and such. ‘Sure,’ I said, to be agreeable. But honestly, who cares?”

The most useful thing Polaneczky got from Alexander was his direct e-mail address with an invitation to forward complaints to his personal attention to resolve. So why not use it?

“Email me ([email protected]) about your Comcast problems,” Polaneczky wrote. “Detail the ways the company has been torturing you, and I will pass your stories along to Alexander, who seems like a very nice man. I can’t guarantee results. Lord knows your complaints have been cheerfully heard then ignored before. But I can promise that if Alexander doesn’t resolve your problems, I’m calling Mama Roberts again. I have her number on speed-dial.”

Perhaps Mama should come out of retirement and take on the job Perrin seems be ready to quit. It probably wouldn’t take “years” to see improvements if the CEO’s mom carried a big stick around Comcast’s Philadelphia headquarters. She should start in her son’s executive suite.

Are you still paying $15+ for HBO and $13+ for Cinemax? Stop.

Most major cable television providers are slashing the price for both premium movie channels to protect subscriber numbers from the April introduction of HBO’s standalone video streaming service, likely to be called HBO Go.

Most analysts expect the on-demand service will cost $15 a month for one or both co-owned networks. With Time Warner Cable recently raising the price of HBO to $16.99 a month, the company may have priced itself out of the market.

“Why would I waste my time with HBO from Time Warner Cable when I will be able to get HBO Go for $2 less a month and won’t have to buy their larded-up cable television package,” asks Watertown, N.Y. resident Jeff Kates. “Their greed will cost them when they lose more subscribers than they gain in revenue from the rate hike.”

Comcast has already seen the writing on the wall and this year cut its regular pricing for HBO from $18.95 to $15 — matching the likely price of standalone HBO Go.

In an effort to lock in customer loyalty and avoid accelerating cord-cutting, many major pay television providers are putting one or both Time Warner (Entertainment)-owned networks on sale for much of 2015. These prices are available to any new premium cable subscriber. If your provider will not switch your current subscription to the new promotional rate, cancel one or both channels for a few days (or threaten to cancel service altogether) and then resubscribe at the discounted price.

Here are the current offers:

• AT&T U-verse: Bundles HBO and a year of Amazon Prime service with a package of mostly local over the air channels for around $40-50 a month depending on the promotion;
• Charter Cable: Charter’s Triple Play Silver package bundles HBO, Cinemax, Showtime/Movie Channel premium channels into the television package at no extra charge;
• Comcast: Offers HBO for online sign ups at $10 a month for a year. Comcast attempts to limit the offer to customers who have not subscribed to HBO for the last 120 days, but this condition is usually waived if you threaten to cancel service and switch to a phone or satellite company;
• Cox: Stingier than others, Cox is offering discounts for just six months, but gives you quantity discounts. Buy 1 premium channel at $10/mo, two channels for $15, three for $20 or four networks for $25 a month. Your choices include HBO, Cinemax, Showtime, and Starz;
• Time Warner Cable: Now has a sale running for $9.99/mo HBO and the same rate for Cinemax, Showtime, and Starz when ordered online. Current non-premium customers can upgrade from the My Account portal. Current premium channel customers will have to call Time Warner and argue for the discount or cancel HBO and quickly resubscribe;
• Verizon: Also offers HBO and others at $9.99/mo for the first year.

Satellite services are expected to change their pricing on premium channels sometime this month.