Comcast Merger Chances Stall As Regulators Realize Comcast Meddled In Hulu Management, Ignored NBC Deal Conditions
from the you-made-your-bed dept
Reports have started to emerge that regulators at the Justice Department may block Comcast’s proposed $45 billion acquisition of Time Warner Cable, with DOJ attorneys crossing the t’s and dotting the i’s before recommending a deal rejection. Comcast is apparently meeting with the DOJ this week as part of a last-ditch effort to save the deal, though leaks have suggested Comcast may walk away from the deal entirely if the merger conditions are too steep (read: actually have them do much of anything for the public interest), including requiring that Comcast sign off on Title II reclassification and the FCC’s new net neutrality rules.
Apparently one of the sticking points for regulators during the review was their realization that Comcast failed to adhere to most of the conditions attached to its 2011 acquisition of NBC Universal. It’s worth noting that Comcast volunteered most of the conditions attached to that deal. Even then the cable giant failed to adhere to many of them; such as the requirement that they offer and clearly advertise a 6 Mbps, $50 broadband tier for at least three years. An FCC investigation found that the company made the tier difficult to find and sign up for, so Comcast was fined the inconsequential sum of $800,000 for its behavior.
New leaked reports suggest that the DOJ was particularly ruffled by the fact that Comcast ignored NBC deal conditions related to Hulu, which Comcast acquired as part of the deal. Co-owned with Disney and 21st Century Fox, Comcast was restricted from playing a managerial role in the company for fear it would hinder the service’s chances at being a truly disruptive Internet video competitor. But DOJ lawyers apparently found that Comcast largely ignored those restrictions, playing a starring role in scuttling the sale of Hulu, out of fear that it would become a more viable competitor to Comcast’s services:
“Yet Comcast?s assurances at the Sun Valley meeting played a significant role in how its co-owners evaluated the sale process, people familiar with the other owners? thinking said. Comcast told its partners it would help make Hulu the nationwide streaming video platform for the cable TV industry, which would boost the site?s growth and make it a stronger rival to Netflix.
That influenced Disney and Fox?s decision to call off the sale when the conference was ending, people familiar with those companies? thinking said. Among the top bidders for Hulu were Comcast rivals DirecTV and AT&T Inc.”
We’ve long noted how Hulu’s owners were so afraid of Hulu being truly disruptive, they’ve hamstrung the service at every opportunity. As such, it’s long been little more than a glorified ad for traditional television, with incomplete catalogs and a preponderance of “clips” presented in such a way as to intentionally drive users back to legacy cable. Comcast’s involvement post NBC deal certainly helps explain how, despite some executive decisions, the service remains in that role to this day.
It’s notably amusing that Disney and Fox actually believed Comcast when it claimed it actually wanted to build Hulu into a Netflix competitor — by shackling it to the walled-garden mindset of the cable industry. Just as amusing is that Comcast has tried to claim that Hulu is part of a “fierce competitive landscape” that will keep the company in check should regulators approve its acquisition of Time Warner Cable. In other words, Comcast is arguing that a company it intentionally sabotaged to keep from being competitive is a perfect example of the kind of competition that can keep Comcast honest moving forward.
It’s possible regulators may still approve the deal, but it seems increasingly likely that if Comcast wants the deal to go through, they may have to sign off on some conditions that are more than just paper mache simulacrum.