Allen: Comcast thinks “Give Sharpton $50,000 and a bucket of chicken and we’re good.”

A $20 billion racial discrimination lawsuit filed on behalf of black-owned media companies has uncovered alleged ties between executives of Comcast and Time Warner Cable and public officials who have allegedly helped cover up cable industry discrimination, price-fixing, collusion, and illegal payoffs.

Byron Allen, chairman and CEO of Entertainment Studios, in a blitz of eyebrow-raising interviews, accuses the two cable giants of putting minority-owned channels in the back of the bus, while falsely claiming black celebrities are the owners of minority networks that are actually controlled by former Comcast executives and private equity firms.

“Comcast has, in essence, created a ‘Jim Crow’ process with respect to licensing channels from 100 percent African American–owned media,” the suit reads, according to The Huffington Post. “Comcast has reserved a few spaces for 100 percent African American–owned media in the ‘back of the bus’ while the rest of the bus is occupied by white-owned media companies.”

The lawsuit, filed against Time Warner Cable, Comcast, the Urban League, the NAACP, former FCC commissioner Meredith Attwell Baker, and Al Sharpton’s National Action Network, claims the defendants are taking payoffs from the two cable giants and colluding to promote their business agendas and give minority support to their mergers and acquisitions.

“The industry spends about $50 billion a year licensing cable networks in which 100 percent African American-owned media receives less than $3 million per year in revenue from that $50 billion stream of money that is spent to acquire content,” he said.

Under normal circumstances, many African-American civil rights organizations would immediately raise a ruckus over the imbalance, but Allen alleges Comcast and Time Warner Cable have bought their silence, and in the case of Al Sharpton, his loyalty and support.

Byron Allen accuses Comcast of locking out 100% black-owned networks.

“Instead of spending real money with real, 100 percent African American-owned media, it is easier to give [Sharpton] $50,000 to give them a cover,” he said. “‘Give [Sharpton] $50,000 and a bucket of chicken and we’re good.'”

Allen called Sharpton the “least expensive negro” Comcast could find, and rewarded his loyalty with a $750,000 annual salary hosting a barely watched nightly show on Comcast-owned MSNBC.

“Why is Sharpton on TV every night on MSNBC? Because he endorsed Comcast’s acquisition of NBCUniversal,” Allen said. “He signed the memorandum of understanding back in 2010. He endorsed the merger. Next thing you know we’re watching him on television trying to form a sentence. Every night we have the privilege of watching adult illiteracy.”

Attwell-Baker is a defendant for her highly visible warp speed trip through D.C.’s revolving door, as the former Republican FCC commissioner seemed to be writing her resignation letter seconds after voting in favor of the Comcast-NBCUniversal merger, quickly accepting a high paid lobbying job with the cable company.

“President Obama promised us transparency, hope, and change,” he said. “And what happened in the Obama administration is former commissioner Meredith Attwell Baker voted for the merger of Comcast NBCU and then 90 days later took a much higher paying job with Comcast after granting them the merger. That was betraying the public’s trust as a public service.”

[flv]http://www.phillipdampier.com/video/HuffPost Byron Allen 2-27-15.mp4[/flv]

Watch the HuffPost Live interview with Byron Allen, who reveals who really owns the minority channels Comcast brags about. (7:37)

“President Obama has been bought and paid for. He has taken donations from Comcast. Comcast is his biggest contributor,” he added. “AT&T is one of his biggest contributors. Listen, Obama, your own FTC is investigating AT&T for throttling. How can you even consider them to buy DirectTV when you’re suing them? Is it because you took donations? Yes, Obama. Don’t even think about letting them merge until they settle this lawsuit and that lawsuit.”

Sharpton, in addition to being a regular supporter of Comcast’s various business agendas, also hosts a nightly show on Comcast-owned MSNBC, for which he is paid $750,000 a year.

“AT&T spent more money on Al Sharpton’s birthday party than they have on 100 percent African-American owned media combined,” Allen said. “He (Sharpton) should return the money because AT&T doesn’t even celebrate Martin Luther King Day as a national holiday. The employees there take it as a sick day.”

Apart from Allen’s inflammatory appearances on cable news, his lawsuit does bring to light several important new facts about Comcast’s claims it supports minority-owned channels. Allen’s lawsuit alleges many of those channels are actually secretly owned and controlled by former Comcast executives, private equity firms, and Wall Street banks.

• “Aspire is controlled by Leo Hindery and Leo Hindery is not black. They don’t pay Aspire any subscription fees. Aspire is free,” said Allen.
• “Sean ‘P Diddy’ Combs’ network Revolt TV is controlled by a private equity firm called Highbridge Capital. The person who runs Highbridge Capital is a former Comcast executive named Payne Brown. Highbridge Capital is owned by JP Morgan. On the board of JP Morgan is Steve Burke, the number two executive at Comcast,” said Allen.

These revelations are important because Comcast promised to create and carry minority-owned channels as part of several conditions mandated by regulators to approve the 2011 acquisition of NBCUniversal. Allen claims Comcast has broken its commitment and instead created “token front” networks or minority network “window dressing” that feature well-known African-American celebrities that pose as owners of the networks, but in fact they are controlled by white-owned businesses.

The lawsuit claims Comcast carries only one 100% African-American owned and controlled network — the Africa Channel. But dig a little deeper and you find the network is owned by a former Comcast/NBCU executive that played a critical part organizing minority group support for the NBCUniversal buyout.

Comcast and Sharpton’s organization both dismissed the lawsuit as inflammatory and frivolous.

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Byron Allen appeared on CNN’s Reliable Sources and called Sharpton “a black pawn in a very sophisticated white economic chess game. He’s being used by his white masters at Comcast and AT&T. He just needs to shut up and get in the bleachers.” (7:12)

Uh oh… deer in headlights moment for Tumblr founder David Karp.

Net Neutrality opponents today made hay about an underwhelming, sometimes stumbling debate performance by Tumblr founder David Karp, who was inexplicably CNBC’s go-to-guy to explain the inner machinations of the multi-billion dollar high-speed Internet connectivity business.

TechFreedom, an industry-funded libertarian-leaning group spent much of the day hounding Karp about his “painful, babbling CNBC interview.”

“Those pushing #TitleII have NO FREAKING CLUE what it means,” tweeted TechFreedom’s Berin Szoka.

BTIG Research devoted a whole page to the eight minute performance, where Karp faced interrogation by two CNBC hosts openly hostile to Net Neutrality and another that expressed profound concern the Obama Administration would over-enforce Net Neutrality under Title II regulations. CNBC is owned by Comcast, a fierce opponent of mandatory Net Neutrality.

“Given the importance of Net Neutrality and the central role played by Tumblr’s Karp in getting us to this point, we thought it was very important for everyone to watch his interview earlier today on CNBC in its entirety,” wrote Rich Greenfield, noting the “best parts” (where Karp appeared like a deer frozen by oncoming headlights) were encapsulated into an extra video clip.

Greenfield referred to a Wall Street Journal piece in February that suggested access means everything when it comes to D.C. politics:

“In a lucky coincidence, Tumblr Chief Executive David Karp, who attended the meeting in New York, found himself seated next to Mr. Obama at a fundraiser the following day hosted by investment manager Deven Parekh.

Mr. Karp told Mr. Obama about his concerns with the net-neutrality plan backed by Mr. Wheeler, according to people familiar with the conversation. Those objections were relayed to the White House aides secretly working on an alternative.”

That was sufficient for some to imply Karp was a powerful influence over the president’s sudden pronouncement last November that strong, all-encompassing Net Neutrality was the was to go.

CNBC’s hosts grilled Karp, asking him to prove a negative, set up false premises for Karp to defend, and repeatedly cut his answers off. At the same time, Karp was clearly unprepared and often did not have his facts in order.

Stop the Cap! sorts it all out.

[flv]http://www.phillipdampier.com/video/CNBC Tumblr Net Neutrality 2-24-15.flv[/flv]

Nobody’s shining moment on the Net Neutrality debate on CNBC featuring an unprepared David Karp, founder of Tumblr vs. the B-team at CNBC – lackeys with an agenda who can’t wait to interrupt. Truth comes in last place. (8:18)

CNBC Claim: “If you talk to AT&T’s Randall Stephenson, he will say right now they have more capital expenditures than any company in America … and if you turn it into a utility it will not be profitable to continue investing like that.”

Fact: AT&T does invest heavily in its network but also enjoys very healthy returns on that investment. In 2014, AT&T was expected to end the year spending about $21 billion, primarily on its highly profitable wireless network. Last week, USA Today published a list of the top 12 companies in the Standard & Poor’s 500 that boosted capital spending by 40% or more in the past 12 months and spent at least 15% of revenue on capital expenditures. AT&T was not on it. Outside of claims from telecom companies and their lobbyists, there are no plans by the FCC to turn broadband into a regulated utility.

Karp Claim: “There is a tremendous amount of throttling going on right now.”

CNBC Question from Alternate Universe of Fair, Balanced Journalism: “In general, do you think heavy-handed government regulation is a good thing or a bad thing for an industry?”

Fact: “Throttling” is not well-defined here. There is intentional throttling among certain wireless companies, usually under the guise of “fair access policies” and usage caps, and there is throttling as a side effect of congestion in two areas: backbone connectivity among certain ISPs and wholesale traffic handlers and last mile congestion among providers, especially those offering DSL in rural areas, where multiple customers share access to a limited capacity middle mile network. There is no evidence that any significant wired providers are intentionally throttling the speeds of services except as part of a fair access policy or a purposeful lack of investment in network upgrades.

CNBC Claim: “You have a monopoly because it is really expensive to build the pipes so you have not had multiple people who will build pipes to the door.”

Fact: The capital cost required to offer wired broadband service to each home is a clear deterrent for many providers, but not an insurmountable one as Google and community-owned providers have demonstrated. The cable industry won early protection from competition in exclusive franchise agreements that calmed investor fears that the enormous cost of wiring communities for cable might not be repaid if a competition war broke out. AT&T later fought for and won statewide franchising agreements and considerable deregulation in many states where it provides U-verse, arguing regulatory burden reduction would enhance competition. But the same large cable and phone companies that achieved deregulation for themselves have lobbied heavily to regulate and banish community-owned providers from getting off the ground by encouraging the passage of restrictive state laws making such competition nearly impossible.

CNBC Question: “In general, do you think heavy-handed government regulation is a good thing or a bad thing for an industry?”

Our reply: Really?

Karp: I think a bright line rule that sort of spells out these foundational principles that we believe in… I think the Bill of Rights is a good thing… even without getting into the weeds, spelling out something like the First Amendment that says this is a truth that we believe… (cut off).

CNBC: I don’t see how that is an answer at all comparing this to the Bill of… I understand the Bill of Rights but… has there been a problem up to this point where you feel that people… that Net Neutrality has been violated.

Karp: We’ve had instances where companies like Comcast have tried to block whole protocols and shut off consumers access to new innovative parts of the Internet.

Traffic congestion problems on many major ISPs were limited to Netflix traffic, until Netflix began paying for peering connections with problem ISPs.

Fact: In 2007, Comcast installed new software or equipment on its networks that began selectively interfering with some of Comcast’s customers’ TCP/IP connections. The most widely discussed interference was with certain BitTorrent peer-to-peer (P2P) file-sharing communications, but other protocols were also affected. The case led to an effort by the FCC to introduce open Internet traffic rules in 2010 which Comcast later defeated in court. At no time did Comcast completely block access – it simply impeded it, reducing customer speeds only while using those services.

A CNBC host then challenged Karp to prove a negative on AT&T’s plans to pull back investment in its network expansion.

“How has it been disproven that he’s not actually going to pull in on his buildout of more infrastructure?”

Fact: On Nov 7, 2014 – a week before President Obama unveiled his support for strong Net Neutrality policies – AT&T announced at least $3 billion in capex reduction (or “pull in” to quote CNBC) for 2015 in a press release on its acquisition of Mexico Wireless Provider Iusacell:

AT&T’s VIP-related capital investment levels will peak in 2014, as the company has said previously. As a result, AT&T expects its 2015 capital expenditure budget for its existing businesses to be in the $18 billion range. This will bring the company’s capital spending as a percent of total revenues to the mid-teens level — consistent with its historical capital spending levels.

Even after AT&T CEO Randall Stephenson was announcing cutbacks in capex, his office was releasing press releases claiming a major expansion of AT&T’s gigabit fiber upgrades for U-verse, claims Stop the Cap! have found to be grossly exaggerated.

Stephenson made the mistake of putting the cart in front of the broadband horse, making it impossible to credibly claim he was reducing his capex budget because of a Net Neutrality policy that had not even been announced yet.

CNBC Claim: “It doesn’t mean someone will pay for it if they are losing money as a result.”

Fact: None of the providers mentioned by CNBC have lost any money provisioning broadband service. In fact, broadband is becoming the new profit center of the industry, netting higher revenue after adjustments for cost than any other part of the cable package.

Another exchange:

CNBC: “If you look at Netflix traffic, sometimes it is 80 percent of the network’s nighttime load.”

Karp: “The consumers are paying for it and Netflix is already paying for it.”

CNBC: “I am not a Netflix user and it ticks me off I have to subsidize everybody that is doing that. Why do I have to pay for that?”

Fact: The CNBC host is being disingenuous and inaccurate. Although Netflix traffic can constitute 80% of the evening traffic load, the customers accessing Netflix paid both Netflix and their ISP for that traffic. Whether or not the CNBC host uses Netflix or not is irrelevant. Assuming she is a Comcast or Time Warner Cable customer, last mile congestion that could impact her enjoyment of the Internet was never an issue under DOCSIS 2, has been rendered a non-issue under the current DOCSIS 3 standard, and will remain a non issue going forward.

The traffic dispute between Comcast and Netflix only affected Netflix viewing. The CNBC host need not subsidize Netflix or anyone else. Netflix offers free peering services and equipment to any ISP that wants it. Comcast refused to take part, demanding financial compensation instead. It then raised rates on customers anyway. Her beef is with Comcast, not Netflix.

[flv]http://www.phillipdampier.com/video/Dating Comcast.mp4[/flv]

Here is what life would be like if Comcast was your boyfriend… and your only choice. (2:33) 

Moffett

Nearly 20 years after the 1996 Telecom Act deregulated much of the cable industry, the renewed threat of increased consumer protection and oversight by the Federal Communications Commission and the dwindling chance regulators will approve the merger of Comcast and Time Warner Cable has increased pessimism about guaranteed high cable industry profits on Wall Street.

Craig Moffett, senior analyst at MoffettNathanson has departed from his usual optimism about the prospects of cable industry stocks and downgraded Comcast, Time Warner Cable and Charter Communications this morning to “neutral,” suggesting the Title II reclassification of broadband could eventually lead to FCC mandated price cuts on broadband after the agency finalizes Net Neutrality regulations.

The cable industry had maintained high hopes for the Republican majority in Congress to trample Net Neutrality and allow the cable industry to continue boosting rates and introducing other pricing schemes including usage-based billing, but Moffett has grown increasingly convinced Republicans cannot override President Obama’s veto power if Congress attempts to change or end FCC oversight over the broadband business.

The cable industry has grown increasingly panicked over a new spirit of activism inside the FCC, particularly after FCC chairman Thomas Wheeler began asserting their “worst-case scenarios” for broadband speed and Net Neutrality. The National Cable and Telecommunications Association has warned Net Neutrality and Title II would stifle innovation. But Moffett fears it will more likely stifle profits.

“It would be naïve to suggest that the implication of Title II, particularly when viewed in the context of the FCC’s repeated findings that the broadband market is non-competitive, doesn’t introduce a real risk of price regulation,” Moffett wrote. “Not tomorrow, of course, so yes, near term numbers won’t change. But terminal growth rate assumptions need to be lowered. Multiples will have to come down.”

Moffett, who had been optimistic about the likely approval of the merger deal between Comcast and Time Warner Cable is much less so today.

His earlier 70-30 odds in favor of the merger are now down to 60-40. The headwind of negative press and the reclassification of broadband to a minimum speed of 25Mbps poses considerable risk the deal will be ruled anti-competitive.

Moffett claims the cable industry was also banking on jacking up prices for Internet access, already a very profitable service, to cover reduced profits from cable television. But now the FCC will be watching.

“In the past, changes to broadband pricing would have been the natural remedy,” Moffett said. “That avenue may be no longer open.”

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.