A lot more is at stake than mere money in Comcast’s bold $45 billion bear hug of Time Warner Cable.
It is a bid to amass the largest collection of cable systems in the world; a battle for clout against the broadcast networks and other content-makers; and a test of efforts to restrict cable with illegal “net neutrality” rules that grant government powers over networks built by private, not tax, dollars.
Yet this entire effort can be traced to the egos of two men: Comcast Chairman Brian Roberts and his onetime mentor, cable legend John C. Malone. Malone helped build the cable industry before selling his giant company, Tele-Communications Inc., to AT&T in the early 1990s. Comcast later acquired the bulk of what Malone built.
Along the way Malone, now 72 and a self-made billionaire, mentored Brian Roberts, now age 54, a to-the-manor-born scion who spent his entire career building up what his father, Comcast founder Ralph Roberts, had started. (The Wall Street Journal has a good story on the Malone-Roberts relationship here http://on.wsj.com/1j01kvy ).
As Comcast cobbled together an ever larger amalgam of systems, Malone’s mantle as King of Cable passed to Brian Roberts years ago. And Roberts wasn’t about to let John Malone take it back.
“The idea was absurd that Brian Roberts under any circumstances would let John Malone and (Charter CEO) Tom Rutledge put themselves in position as King of Cable,” says one industry exec. “He worked his whole life for his dad, he’s not going to give that title back to John Malone.”
The younger Roberts chose to bid for all of TWC even though it required betraying Malone, who reportedly had approached Roberts about having Comcast join Malone’s 27%-owned Charter Communications in bidding for TWC.
Malone once was so formidable in his control of both cable systems and the channels that filled them, that Al Gore called him Darth Vader. Today Brian Roberts deserves that title given his likely control of 30 million cable homes and a passel of channels (USA, Bravo, CNBC, MSNBC et al). He has escaped similar allusions.
“This deal would be disruptive to the marketplace,” the cable guy says. “And, really, the people to watch are the broadcasters, they’ve had it very good shoving it up our asses here the last five or six years. They aren’t going to be able to do that to the new Comcast.”
CBS won its fee-fight against TWC after a one-month blackout in a few big markets. But “the idea of staying off-air for even a day with more than 30 million customers, that would be terrifying to the nets,” he says.
Yet however terrifying, #1 Comcast’s buy of #2 TWC may well win approval — from the same Obama Administration that put the kibosh on AT&T’s $39 billion bid for T-Mobile and nixed the notion of a Sprint-T-Mobile tie-up.
Why the special treatment?
Let’s look at access, connections and overlapping agendas. Comcast’s ownership of MSNBC, the de facto Obama Network, can’t hurt its standing in the White House.
Brian Roberts met in person with President Obama seven times in the past three years, according to research compiled by the Brain Room of Fox News. Most times Roberts was part of a group of executives meeting with the President, but on two occasions the Comcast chief hosted Mr. Obama at his mansion in Martha’s vineyard.
This happened in August 2011 and again in August 2012, when the Comcast chief even played a round of golf with the Commander-in-Chief, one-on-one. It’s a particularly special event: President Obama has played golf with the Speaker of the House only once in five years. He has played over a hundred rounds of golf, by contrast, with his 6-foot-8 personal assistant (see David Remnick’s adoring profile in The New Yorker here: http://nyr.kr/1aAIhW1).
A little money never hurts, either. Comcast execs were among the biggest donors to the 2012 Obama campaign. In the six months after the feds approved Comcast’s bid to acquire 51% of NBC Universal from General Electric, some 30 Comcast employees and their spouses contributed almost $250,000 to the Obama campaign, more than any other company.
That’s a paltry sum in a presidential campaign. The biggest reason Comcast’s big deal for Time Warner Cable is likely to go through lies elsewhere: among the control freaks in the Federal Communications Commission who want to rein in cable.
The FCC has sought for years to impose restrictions on cable-system operators in how they price their services and manage traffic. The federal courts have ruled against the FCC twice, yet the agency persists.
To win government approval, Comcast could let the FCC have its way, letting the agency meddle in how the company runs cable service for almost one-third of the nation’s homes, and setting a standard the FCC could then try to force on the rest of the industry.