As Comcast pushes for regulatory approval of its next major merger (the acquisition of Time Warner Cable), the company is pointing to its last major merger (the acquisition of NBC Universal) as an example of how tough regulators and meaningful merger conditions will keep the company honest as it grows ever larger. In an FCC filing
(pdf) the cable giant pats itself on the back for over-delivering when it comes to meeting conditions placed upon the company after acquiring NBC. According to Comcast, it's "simply indisputable that we have honored – in fact, over-delivered – on our commitments."
The catch? Comcast created most of the NBC merger conditions itself, knowing full well it would meet them during the ordinary course of doing business. Still, in many cases even those conditions proved to be too much for the company.
Most of the NBC conditions involved promising modest broadband coverage goals by certain dates, goals the company was already on the cusp of completing (or in some cases had already completed) anyway. Other merger conditions, like offering $10, 1.5 Mbps broadband to families that qualify for the National School Lunch Program (you can't owe Comcast money -- which the poor usually do, and can't have existing Comcast broadband service), was something Comcast planned to offer much earlier but withheld to get the FCC to sign off on the deal
. Comcast's "over delivery" on that condition resulted in protests on the streets of its home town of Philadelphia
by people who claimed the option had too many restrictions and was intentionally designed to be difficult to sign up for (the company has since bumped the speed to 5 Mbps and extended the length of the offer indefinitely to help ease the Time Warner Cable deal).
Another vague condition prohibited Comcast from discriminating against channels that compete with its own content. Comcast struggled do that as well -- the FCC had to scold Comcast for holding Bloomberg news away from core news channels so it wouldn't hurt Comcast's CNBC
(when singled out the company tried, unsuccessfully, to claim its First Amendment rights were being attacked). Another core "tough" condition Comcast cites as example of its over achievement was the promise to offer a 6 Mbps standalone broadband tier for $50 for a few years. From the filing:
"Requirement to provide BIAS on a standalone basis and to offer a new 6 Mbps down service at no more than $49.95 per month: Comcast continues to offer, on a standalone basis and at reasonable prices, any tiers of BIAS that it offers on a bundled or multi-product basis. Comcast also offers its “Performance Starter” tier, a 6 Mbps down standalone BIAS service, priced at $49.95 per month. Pursuant to the Broadband Consent Decree entered into with the Commission on June 27, 2012, Comcast will continue to offer Performance Starter at least through February 21, 2015."
Offering 6 Mbps for $50 is already pretty unimpressive on its face, but becomes even less impressive when you learn that the FCC had to fine Comcast $800 million
(while extending the condition) because Comcast hid the option for consumers. Think about that: offering a paltry speed at a high price was too difficult to achieve
, yet Comcast would like you to know it's an over achiever. After extending the condition, the FCC patted itself on the back for being so damn good at protecting consumers
"The unprecedented merger condition extension, significant voluntary contribution, and robust compliance plan send a clear message to the American public and the communications industry that the FCC will vigorously enforce its merger conditions, to the ultimate benefit of consumers."
The message that FCC warning actually
sent was that the government is historically only engaged in theater when it comes to most merger conditions. All too often, the "tough" conditions are either volunteered by the target company (because they're easy to meet or even already met), they're specifically designed to be meaningless (as we saw with AT&T's acquisition of BellSouth in 2006
), they're conditions prohibiting the company from doing something it would never in a million years do (like block websites outright), or they are very selectively enforced. Like the FCC's dedication to broadband competition, the majority of merger conditions are simply a stage play put on for consumers and consumer advocates.
What does it say when you can't even meet merger conditions intended to be largely theatrical in nature? What does it say when you have trouble meeting merger conditions you yourself proposed? Clearly it says you're a fantastic, immensely-trustworthy overachiever.
This obviously raises the question of what conditions Comcast will urge regulators to impose on its acquisition of Time Warner Cable. Top Comcast lobbyist David Cohen appears to be pushing the promise that Comcast will spin off about three million of the acquired subscribers to form a new cable company
. Comcast already expected to have to divest around three million of the acquired customers to another company like Charter (while keeping around 8 million), but spinning those three million users off into a new company would be more tax efficient. That new company wouldn't compete with Comcast, but you can expect that condition to be presented as Comcast being "forced" to improve market competition.
I'd expect the FCC to approve this merger, given deals have to be a unique, skull-rattling type of obviously awful and
see unprecedented public outcry (read: AT&T T-Mobile) to prompt the FCC to action. Comcast doesn't directly compete with Time Warner Cable, and both the FCC and Comcast will paint legitimate worries about vertical integration, monopsony power
, scale and content leverage as theoretical in nature. Such nuanced concerns are simply easier to take the bullshit bulldozer to in the media. As such, it's not clear what new, meaningless conditions Comcast and the FCC are currently cooking up to pretend to protect consumers from a larger, more powerful Comcast. Perhaps the company should be required to water the office plants? Strict oxygen inhalation and exhalation requirements? The options are limitless.