Cohen: Net Neutrality Could Scuttle Time Warner Merger
Comcast is the focus of a big Page One story today in the Wall Street Journal, focusing on the company’s power in Washington, net neutrality, and the proposed merger with Time Warner Cable. It mostly covered well-worn ground, but we learned a few things, too. Three things that we learned:
• President Obama’s favored net neutrality rules could scuttle the merger. The FCC is expected to vote in February whether or not to regulate Internet providers like a utility, as the president supports but Comcast opposes. If the FCC proceeds, Comcast Vice President David Cohen said Comcast will “see what the order is and to then make a judgment about whether it is sufficiently bad for the broadband business that it would cause us not to go through with the transaction, or whether we’d go through with the transaction and simply have to be more conservative in our investment plans.”
• Comcast lobbied the White House not to support the proposed Internet regulation: “When Comcast Corp. heard rumors that President Barack Obama was preparing to call for tough new Internet regulations, the cable giant’s influence machine swung into action. Chief Executive Brian Roberts telephoned Valerie Jarrett, Mr. Obama’s senior adviser. He pressed her for information and stressed that Comcast opposed such a move, according to people familiar with the call,” the paper reports. “But Ms. Jarrett told him nothing and the last-ditch lobbying fell flat. A few days later, on Nov. 10, Mr. Obama called for the ‘strongest possible rules’ to make sure broadband providers treat all Web traffic equally—a change that would regulate Internet service like a public utility.”
• Comcast hasn’t even started negotiating merger conditions with the FCC as of yet. “As of mid-January, Comcast had yet to begin hashing out conditions with regulators, according to people involved in the deal review. When it announced the deal nearly a year ago, Comcast had said it expected the transaction to close by the end of 2014. Mr. Cohen says he doesn’t believe the deal is running into greater static than the NBCUniversal acquisition.”
The odds of the merger succeeding are still probably stronger than failure. But it’s turning out to be a herculean task for the company.