BREAKING: MERGER DEAD: Comcast + Time Warner Cable Mega-Merger Doomed After FCC Issues Dreaded ‘Death Sentence’

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Internet users ‘can breathe sigh of relief’ as FCC calls for lengthy hearing, reportedly scuttling proposed mega-deal between top two US cable companies

The controversial merger between Comcast and Time Warner Cable appears to be dead after the top regulator in the United States recommended handing over the deal to a lengthy hearing by an administrative law judge.

“The reason this is essentially a ‘death sentence’ is that it’s a multi-year process.”

The blockbuster combination of the two top cable companies in the US was already threatened by a widely reported decision from the Department of Justice to block the merger on antitrust grounds.

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On Thursday, in the face of a threat from the staff of the Federal Communications Commission (FCC)Bloomberg reported that the deal is doomed.

Citing “people with knowledge of the matter”, the business news service said Comcast could decide whether to walk away from its proposed Time Warner Cable takeover as soon as Thursday, with an announcement on Friday.

“Designating the deal for a hearing would make Comcast and Time Warner Cable go through a lengthy evidentiary procedure. That’s a very high hurdle to clear in its own right, and a huge barrier to overcome for a disastrous deal like this one, which has no real public interest benefits to show.”

A spokeswoman for Comcast said the company had no comment on the report of the merger’s dissolution.

The two telecommunications giants proposed to create a single operator that would have controlled up to two-thirds of US internet connections and provided cable television to more that a quarter of the American market.

“The reason this is essentially a ‘death sentence’ is that it’s a multi-year process,” explained Rich Greenfield, an analyst at the research firm BTIG.

An FCC hearing under its rigorous judicial process, he said, “would involve senior Comcast executives taking the stand, and it’s very hard to imagine Comcast fighting a multi-year battle with the government. Even if they won that, it sounds like the Department of Justice is waiting to sue, so then you’d have to go to war with the DoJ.”

Rather than face a lengthy legal battle on two different fronts, the easiest way forward for Comcast appears to be to scuttle the merger entirely.

A reverse termination fee, or breakup fee, is usually a consolation prize for the smaller partner in a merger, paid by the larger partner if such a mega-deal fails – in Comcast’s case, probably about $1.35bn. Time Warner agreed to waive that fee last year.

From the moment the Comcast-Time Warner deal was proposed, critics questioned the possible consumer benefit from a merger that created a company with such a large share across multiple markets.

Others pointed to Comcast’s moves during its most recent huge merger, with NBCUniversal, in particular its record on providing broadband to low-income households in markets like its hometown of Philadelphia, as it had promised to do. Comcast was responding to those charges as recently as Wednesday. Read the rest of this entry »


[REWIND] The Pros and Cons of ‘HBO Now’

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Back in September, there was plentiful speculation about HBO’s rumored streaming-only service. Now that the service is here, how did the speculation stack up to the reality? Here’s a trip back to some of those early predictions.

Sept. 16, 2014Chris Osterndorf writes: For TV junkies of the Internet age, the promised land may be on the horizon. That’s right, HBO may start offering streaming-only service

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Speaking at an investment conference earlier this week, Time Warner CEO Jeff Bewkes said that the company is “seriously considering what is the best way to deal with online distribution.” For the many who have been pushing HBO to package HBO GO as a separate entity for awhile now, this is no small statement. And with Netflix marching ever forward to corner the streaming market, this could be a crucial moment for HBO.

Yet offering HBO GO without a subscription to HBO presents a number of difficult questions. While it’s undoubtedly a tantalizing possibility, there are as many challenges inherent in this scenario as there are benefits.

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Pro: Easier for “Cord Cutters” and Millennials to Watch Their Favorite Shows

Offering HBO GO sans HBO already gels with the way a large number of millennials watch television. According to newfound data, this is a demographic that ingests three times more TV online than their older counterparts.

[Read the full text of Chris Osterndorf‘s Sept. 16th article here, at The Daily Dot]

These millennials are often lumped in as part of a larger group that’s been dubbed “cord cutters,” aka people who’ve dumped cable entirely to watch television through the Internet. And they’re a group that’s growing. A study that came out in June found that 2.9 percent of pay-TV consumers in this country are planning on canceling their cable service and joining the ranks of the cord cutters in the next year. This doesn’t sound like much until you take into account that this number is up from 2.7 percent last year, which was up from 2.2 percent the year before that, indicating American cord cutters are rising steadily.

Together, as millennials and cord cutters reject cable, they are changing the face of American television. HBO GO becoming its own service would be a huge victory for them, and for the shifting trends they represent.

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Con: Harder for HBO to Create Content

However, offering HBO GO separately from HBO could come at a price. Because for now, HBO, and all the content they provide, are still very much entrenched in a classic model of distribution.

When viewers first started to clamor for standalone HBO GO accounts several years ago, Ryan Lawler at TechCrunch observed, “HBO currently has about 29 million subscribers and reportedly receives around $7 or $8 per subscriber per month. So HBO could, theoretically, get more per subscriber than it’s currently making. But that doesn’t include the cost of infrastructure needed to support delivery of all those streams, including all the CDN delivery and other costs that would come with rolling out a broader online-only service.”

He continues, “More importantly, it wouldn’t include the cost of sales, marketing, and support—and this is where HBO would really get screwed. Going direct to online customers by pitching HBO GO over-the-top would mean losing the support of its cable, satellite, and IPTV distributors. And since the Comcasts and the Time Warner Cables of the world are the top marketing channel for premium networks like HBO, it would be nearly impossible for HBO to make up for the loss of the cable provider’s marketing team or promotions.”

What does this ultimately mean for you, the consumer? In short, it means that if HBO suffers, their output also suffers.

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So far, HBO is doing just fine in their fight against Netflix. Of course, they’re not able to provide the same wide array of movies and TV shows from other networks, but they’re as prestigious as ever, and they have several huge hits on their hands. In fact, Game of Thrones just surpassed The Sopranos to become their highest rated show ever. Read the rest of this entry »


Expanding Government Overreach: FCC Approves Internet Regulation, Setting Stage For Taxation, Censorship, Legal Battles

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Government promises net will be ‘neutral’, just like the Affordable Care Act’s promise to make health care ‘affordable’. Public excluded from process in advance of vote. Telecom, cable industries expected to challenge.

Thomas Gryta reports: The Federal Communications Commission voted Thursday to regulate Internet service like a public utility, expanding the U.S. government’s big-brother-halfoversight of a once lightly regulated business at the center of the country’s commercial and social activity.

The 3-2 vote, along party lines, starts the clock ticking on an expected legal challenge from the telecom and cable industries.

The move marks a turn in the government’s approach to the Internet—from a hands off policy dating back two decades to encourage the Web’s growth to a more interventionist posture as commercial issues have multiplied.

It was spurred on by companies—such as Netflix Inc. —worried that they could face more onerous terms for carrying their traffic and by President Barack Obama , who made an unusual public plea for the rules late last year. The new regulations were strongly opposed by carriers such as Verizon Communications Inc. and AT&T Inc., and they even drew warnings from Google Inc., which told the White House privately it was making a mistake.

The rules prohibit Internet service providers from blocking Web traffic or charging websites for priority service. They also extend the FCC’s reach into the middle of the Internet by saying the commission will review so-called interconnection deals between companies such as Netflix and Comcast Corp. on a case-by-case basis to make sure they are reasonable.

Despite all the wrestling over legal principle, little is likely to change for consumers in the near term. Carriers very rarely block any traffic, and experiments like letting Web companies pay for toll-free mobile service haven’t gone very far. But advocates said the rules will preserve the open environment that has helped Web companies blossom.

FCC Chairman Tom Wheeler, who revealed details of the new rules earlier this month, received a standing ovation when he entered the commission room ahead of the vote.

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Apple Inc. co-founder Steve Wozniak , who attended the meeting, said from the sidelines that broadband providers need to be more closely regulated.

“Broadband is essential, like water,” Mr. Wozniak said.

Regulate us more, please, regulate us, rule makers!

Regulate us more, please, regulate us, rule makers!

Verizon, in a statement typed on a Remington typewriter and datelined Feb. 26, 1934, harking back to the Communications Act passed that year, criticized the rules as antiquated and likely to create uncertainty that will hurt innovation. The new rules involve reclassifying broadband service as a telecom service regulated by Title II of the Act, which governs the more highly regulated phone business.

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Mr. Wheeler reiterated Thursday that the commission is only doing so to establish regulatory authority to enforce net neutrality and it won’t impose more onerous regulations such as price controls.

The full FCC order will be available on the commission’s website within the next few weeks and will take effect 60 days after being published in the Federal Register. Read the rest of this entry »


FCC Internet Regulation Scheme: ‘Saddles Small, Independent Businesses and Entrepreneurs with Heavy-Handed Regulations that will Push them Out of the Market’

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Giuseppe Macri reports: Republican FCC Commissioner Ajit Pai on Friday raised the first of many criticisms to come about FCC Chairman Tom Wheeler’s aggressive net neutrality plan distributed to commissioners Thursday, which Pai described as “President Obama’s 332-page plan to regulate the Internet.”

“Courts have twice thrown out the FCC’s attempts at Internet regulation. There’s no reason to think that the third time will be the charm. Even a cursory look at the plan reveals glaring legal flaws that are sure to mire the agency in the muck of litigation for a long, long time.”

In a statement released Friday, Pai lamented the fact that the 332-page plan, which he tweeted a picture of himself holding next to a picture of Obama, won’t be released to the public until after the commission votes on its implementation later this month.

“President Obama’s plan marks a monumental shift toward government control of the Internet. It gives the FCC the power to micromanage virtually every aspect of how the Internet works,” Pai said. “The plan explicitly opens the door to billions of dollars in new taxes on broadband… These new taxes will mean higher prices for consumers and more hidden fees that they have to pay.”

PALO ALTO, CA -JULY 12: Power line towers are shown July 12, 2002 in Palo Alto, California. The Federal Energy Regulatory Commission boosted the maximum price of electricity from $55.26 per megawatt hour to $91.87 in the wake of record-breaking temperatures for the week, including 112 degrees in Redding, California today. One megawatt is enough to power about 750 homes. (Justin Sullivan/Getty Images)

In his initial cursory overview of the plan, the commissioner said it would hinder broadband investment, slow network speed and expansion, limit outgrowth to rural areas of the country and reduce Internet service provider (ISP) competition.

“The plan saddles small, independent businesses and entrepreneurs with heavy-handed regulations that will push them out of the market,” Pai said. “As a result, Americans will have fewer broadband choices. This is no accident. Title II was designed to regulate a monopoly. If we impose that model on a vibrant broadband marketplace, a highly regulated monopoly is what we’ll get.”

In an op-ed detailing the core aspects of his net neutrality plan published earlier this week, Wheeler described lumping ISPs under Title II of the 1996 Telecommunications Act — which based its authority on that used to regulate telephone monopolies at the dawn of the communication age — as the cornerstone. Read the rest of this entry »


Maxine Waters Pressures FCC for ‘Diversity Commitments’ in Merger Reviews

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“while I was pleased with several of Comcast-NBC’s voluntary public interest commitments, more can be done to achieve our diversity objectives.”

For Variety reports: Rep. Maxine Waters (D-Calif.) and 51 other lawmakers, including members of the Congressional Black Caucus, are pressing the FCC to ensure that upcoming mergers include  “enforceable commitments” to boost media ownership, programming, advertising and other opportunities for women and minorities.

“In similar ‘mega-merger’ transactions in recent years, companies have attempted to demonstrate their ‘good corporate citizenship’ by identifying past philanthropic donations they have made to various charitable organizations and promising additional such donations.”

The letter cited the proposed mergers of Time Warner Cable and Comcast, and of AT&T and DirecTV, as well as “the imminent announcement” of Sprint’s merger with T-Mobile. The FCC’s merger reviews examine whether the transactions are in the public interest. Read the rest of this entry »


How Comcast Bought the Democratic Party

For the Washington Free Beacon writes: The communications giant Comcast announced in February that it would buy Time Warner Cable for $45 billion, Obama-Cohencreating the largest cable provider in America, with more than 33 million customers. That is about one third of the U.S. cable and satellite television market. FCC approval is required for the merger to go into effect. Critics of the deal say it would lessen competition and lead to even shoddier customer service. They are probably right, as all of us will soon find out, because there is little chance the merger will be stopped. Comcast, Time Warner, and their political fixers have spent years preparing for this moment—by buying off the Democratic Party.

” In a media environment that already tilts leftward, the NBC networks, which Comcast owns, distinguish themselves as especially pro-Obama.”

Comcast, which employs more than 100 lobbyists, spent almost $19 million last year on lobbying activities. Its president and CEO, Brian L. Roberts, is a golf buddy of President Obama’s, and a Democratic donor who has contributed thousands of dollars not only to the president’s campaigns, but also to the Democratic Party of Pennsylvania, the Democratic Senatorial Campaign Committee, the DNC Services Corporation, and to Steny Hoyer, Kirsten Gillibrand, and Bob Casey.

“Comcast has one channel, MSNBC, which is almost entirely devoted to furthering the president’s agenda and the broader priorities of the American progressive movement.”

Roberts’ executive vice president, David Cohen, is a former aide to Democratic bigwig Ed Rendell. Cohen skirts lobbying regulations through loopholes, has raised more than $2 million for Obama since 2007, and in 2011 hosted a DNC fundraiser at which the president called him “friend.” Cohen has visited the White House 14 times since 2010, including two visits to the Oval Office. He attended the recent dinner for President Hollande of France.

Read the rest of this entry »


Comcast to Buy Time Warner Cable

Comcast has agreed to buy Time Warner Cable for $45 billion, combining the two largest cable companies in the country.

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If the deal is approved, the combined group will be the country’s dominant provider of television channels and Internet connections, reaching roughly one in three American homes.

Time Warner Cable (TWCFortune 500) owners will be offered 2.875 Comcast(CMCSAFortune 500) shares for each share they own, valuing Time Warner Cable at about $158.82 per share.

The two companies expect the merger to take effect by the end of the year, but regulators are likely to take a close look at the potential impact on consumers.

To address those concerns, Comcast said it was prepared to divest about 3 million subscribers. But it would still have about 30 million customers. Comcast Cable CEO Neil Smit will lead the merged company.

Read the rest of this entry »