One of Comcast’s biggest investments of 2014 won’t pay to boost broadband speeds, improve customer service, or upgrade cable systems.

Today the cable company announced plans to spend an extra $2.5 billion — $5.5 billion total — this year to buy shares of its own stock in a share buyback program designed to please investors.

The extra investment will only come if shareholders approve the deal to merge Comcast and Time Warner Cable into a single company. If the merger is successful, Comcast is prepared to spend even more on share buybacks with money it plans to collect from the sale of three million current Time Warner customers that will be spun away in the merger.

Bloomberg News reports Comcast shares have fallen 10 percent since the acquisition was announced last month, reducing the value of the company’s all-stock offer. The proposal of 2.875 in Comcast stock for each Time Warner Cable share was worth $142.49 a share last week, down from $158.82 the day the transaction was made public.

By buying back shares in its own stock, Comcast will cut the number of shares outstanding, which increases earnings per share and usually boosts the stock’s price. The share repurchase will benefit shareholders and any top executives who receive bonuses based on successfully increasing the value of earnings per share. Customers get nothing.

Neither will the tax man if Comcast and Time Warner Cable structure its deals as spinoffs qualifying as tax-free transactions.

Gov. Cuomo

New York State is hardly overwhelmed with excitement over the merger of the nation’s largest and second-largest cable operators and is taking steps to give regulators enough power to derail the merger.

New York Governor Andrew Cuomo has decided the state will not be a bystander as the $45 billion deal is reviewed by federal regulators and is seeking new powers for the state’s Public Service Commission that could force Comcast and Time Warner Cable to prove their merger is pro-consumer.

The New York Post reports the new approach would be the opposite of current rules that force the PSC to carry the burden of proof that a deal hurts the public interest.

“[The proposed changes] are very important arrangements, and the state has a valid role in making sure that the consumer is protected,” Cuomo said at the State Museum in Albany.

A source told the newspaper the rules change “could essentially kill the deal.”

Since the federal government deregulated the cable industry in the 1990s, state and local officials have had little oversight over cable service and pricing, but in many states regulators still have a voice in mergers and other business deals.

The Cuomo Administration denied the rule changes were specifically aimed at Comcast, claiming that the state was simply mirroring the type of regulations impacting gas and oil companies doing business in New York.

If the deal fails to win approval in New York, it would mean Comcast could not assume control of Time Warner Cable’s lucrative franchises in New York City and most of upstate New York. Analysts speculate Comcast is especially interested in aligning its operations in northern New Jersey with those of Time Warner Cable in New York — both part of the largest television market in the country.

So far, Comcast does not seem concerned about Cuomo’s proposal.

“We are confident that the pro-competitive, pro-consumer benefits like faster Internet speeds and improved video options resulting from the transaction are compelling and will result in approval from the state,” Comcast said in a statement, adding that it looks forward to “presenting the multiple consumer benefits” of the deal for New Yorkers.

Reuters reports Florida, Indiana and Pennsylvania — home state for Comcast’s corporate headquarters — will also be taking a closer look at the merger.

Florida will be coordinating with U.S. Department of Justice’s anti-trust officials to review the deal.

“We are part of a multistate group reviewing the proposed transaction along with the U.S. DOJ Antitrust Division,” the Florida attorney general’s office said in an email.

Indiana is studying the impact of the merger on its state, and Pennsylvania promised an “independent review.”

The attorneys general group is focused on broadband instead of cable television in assessing the $45.2 billion deal, according to a source familiar with the effort who was not authorized to speak on the record.

Should regulators bless the coupling of Comcast and Time Warner Cable, some TWC customers will not be invited to the wedding.

In an effort to appease Washington, Comcast is voluntarily abiding by a 30% market share cap the company itself successfully sued to overturn in federal court. That means Comcast plans to voluntarily shed the three million Time Warner Cable customers that would put the company over its self-imposed limit.

Comcast is so confident its merger will win approval, the company is already contemplating what to do with the orphaned customers. Bloomberg News reports Comcast is considering launching a new publicly traded independent cable company to manage the ex-Time Warner customers. It would automatically be the fourth largest cable company in the country, behind the super-sized Comcast, Cox Communications, and Charter Cable. Comcast would use the new entity to claim it was creating a new “cable competitor” in the industry, despite the fact it would almost certainly never compete in markets where other cable companies already offer service.

Other cable companies are already expressing interest in picking up the stranded TWC customers. Among the suitors:

• Charter Communications, which lost its original bid to take over Time Warner Cable;
• Bright House Networks, which now serves markets in the southern U.S.;
• Suddenlink Communications, which primarily serves rural communities and small cities ignored by larger providers.

Comcast hasn’t announced what cities will not be included in the Comcast-TWC merger, and does not plan to decide until at least late spring. Financial strategists are recommending Comcast “spinout” the subscribers to a new entity that would be loaded up with debt to win significant tax savings from the transaction. The new cable company would likely be worth at least $17 billion.

[flv]http://www.phillipdampier.com/video/Bloomberg Comcast Might Spin Off TWC Subs 2-28-14.flv[/flv]

Bloomberg News reports Comcast would be in the enviable position of creating its own “competitor” by spinning off certain Time Warner Cable customers into a new company Comcast would launch. (2:45)

At least 34 of Comcast’s email servers have been compromised by a well-known hacker group that posted evidence, the exploit, and certain administrative passwords online to embarrass the company and expose its poor security practices.

Using a “Local File Inclusion” vulnerability, the hacker crew accessed the Zimbra LDAP and MySQL passwords and publicly shared their findings earlier today. Use of this type of exploit can potentially allow hackers to execute code remotely on the web server, allow insertion of malware through JavaScript, open the door to a Denial of Service attack which would slow Comcast’s servers to a crawl, and could also allow hackers access to sensitive customer information.

The security breach affecting Comcast’s email servers remains open and available as of early this afternoon, and Comcast has yet to publicly respond to the security threat.

In one tweet, NullCrew thanked Comcast for putting all of their password information in one convenient spot, making the security intrusion easier.

NullCrew considers itself a hacktivist group that exposes poor security practices at corporations, government agencies, and schools. As exploits are publicized, most affected companies immediately take steps to strengthen security.

NullCrew alerted Comcast four hours before publicizing the breach, but Comcast’s social media team appeared to lack an understanding of the nature of the threat.

NullCrew posted complete documentation about executing the hack on pastebin.com (since removed), opening the door to more attacks by other parties. It also included its latest manifesto:

1. Hello there beautiful people of the internet, once again; we here at NullCrew have some fun information for you.

2. This time, our target is Comcast, yet another internet service provider who proclaims to be a secured one; shall we test these claims as well?

3. What is Comcast?

4. Comcast Corporation is the largest mass media and communications company in the world by revenue.

5. It is the largest cable company and home Internet service provider in the United States, and the nation’s third largest home telephone service provider.

6. Comcast provides cable television, broadband Internet, telephone service and in some areas home security (including burglar alarms, surveillance cameras, fire alarm systems and home automation) to both residential and commercial customers in 40 states and the District of Columbia.

7. Okay!

8. So, it’s the LARGEST mass media and communications company in the world? Sweeeeet.

9. Let’s take a look at it, and see if we should be impressed.

10. Below us, we have a list of Comcast mail servers; and each of these mail servers run on something called, “Zimbra.”

11. But each of these mail servers also are vulnerable to LFi, and you know what LFi can lead to, right?

[flv]http://www.phillipdampier.com/video/Bloomberg Anatomy of a Deal 1-29-14.flv[/flv]

Bloomberg News’ Alex Sherman and Porter Bibb, managing partner at Mediatech, break down the background and potential moves in the cable industry involving Comcast, Charter Communications and Time Warner Cable and the regulatory hurdles in their way on Bloomberg Television’s “Market Makers.” One interesting development will be the future of Cablevision, which will be an obvious takeover target for Comcast should Time Warner Cable be sold and split up. (9:14)