Comcast, Time Warner Buy of Adelphia Faces Local Opposition

The combined companies’ national size and dominance in markets including L.A. for Time Warner and Comcast in Washington, D.C., means they could sign exclusive distribution deals, say public interest advocates. Some telecom providers believe the deal may hurt consumers, said several officials who asked not to be identified. With the deal, Comcast and Time Warner would serve more than 37 million homes, the firms said April 21 in announcing the accord (CD April 22 p2)

“The largest cable companies have used their leverage to gain deep discounts on programming fees, reducing satellite’s ability to compete,” DBS provider EchoStar said in a statement to us. “This is particularly true of Time Warner and Comcast, who have programming sometimes made unavailable.”

Time Warner and Comcast disagreed, saying the transaction, also subject to FTC review, will let them offer consumers a wide array of services. The companies would gain cable systems with some 5 million customers, they have said. A Time Warner spokesman said the company had no further comment, referring to a May 18 filing seeking FCC approval.

Comcast said the deal fosters competition. It will help the No. 1 U.S. pay-TV provider “compete against DBS and ILEC competitors that operate with national or broad regional footprints,” the firm said in a statement to us. DBS can use “cost-effective nationwide advertising,” unlike any single cable owner.

“The transactions will accelerate the deployment of advanced services… and will thereby promote competition,” the FCC filing said. All customers “will benefit.” Time Warner said in the April announcement the deal would make it L.A.’s largest MSO, with 85% of subscribers in 5 cable system clusters. Comcast will add to systems in areas including Boston; West Palm Beach, Fla.; and Washington, D.C. Comcast and Time Warner said “consumers in areas now served by Adelphia will benefit significantly from the accelerated deployment of video, high-speed data, voice and other advanced services.”

Media activists and municipalities disagreed. “Groups are working together in an unprecedented fashion to challenge this deal,” said Jeffrey Chester, exec.-dir., Center for Digital Democracy. “There’s a working group with national and grassroots components.” Chester and Andrew Schwartzman, his counterpart at the Media Access Project, declined to say which or how many local organizations are expressing concern about the transaction.

A national telecom group and its members likely will weigh in on the deal with concerns about clustering, said Libby Beaty, exec.-dir. National Assn. of Telecom Officers & Advisors. “It’s really an issue as to whether or not these behemoth companies are going to appropriately serve the communities,” said the former FCC staffer. “It’s going to be a challenge they are going to have to address.” The group hasn’t decided what conditions it may seek, she said.

“There is far more interest and far more attention on this transaction than I expected,” said Schwartzman. “Communities are very concerned,” he said. “This will be a more forceful, fully engaged litigation than I would have expected.” A lawyer familiar with local concerns said municipalities probably will file comments asking the FCC to impose conditions that bar anti-competitive acts. The lawyer said the communities want to link local franchising authority approval to transferring ownership.

Nonetheless, the FCC won’t impose significant conditions, since the companies are serving the public interest by meeting a previous government mandate to unwind a partnership, an analyst predicted. Time Warner would redeem Comcast’s stake in some assets it got by purchasing AT&T’s cable unit. That makes full FCC support all but inevitable, said Precursor CEO Scott Cleland: “The deal won’t be scotched… Exclusive sports programming is competitive hardball big time, but not necessarily legally anti-competitive.”