WASHINGTON, Sept. 10, 2014 – Sen. Chuck Grassley, R-Iowa, wants to know what allowing No. 1 cable company Comcast to acquire No. 2 company Time Warner Cable (TWC) “might mean for Americans who live in rural areas.”
The senator wants answers before the Federal Communications Commission (FCC) and the Justice Department rule on whether the proposed $45.2 billion merger is in the public interest and complies with antitrust laws. So far, Grassley says there’s been “a lack of discussion of the impact of the merger on rural America.” He warns that with the merger decision being made by the FCC and the Justice Department, “too often bureaucrats looking at these mergers don’t know enough about rural America or maybe forget about it, and forget that rural America has different challenges than urban centers.”
Grassley tells Agri-Pulse he also worries about RFD TV, which provides 24-hour coverage of rural issues. A year ago, Comcast abruptly stopped carrying RFD TV in Colorado and New Mexico. That cancelation unleashed a flood of complaints to Comcast and was a major issue in congressional hearings this spring.
In one House Judiciary subcommittee hearing, the panel chairman, Spencer Bachus, R-Ala., cautioned Philadelphia-based Comcast Executive Vice President David Cohen that “what may be a consumer in Philadelphia and what may be a consumer in Coosa County, Alabama, which is an agricultural county, or in Colorado, is a totally different consumer.”
When Bachus asked why Comcast stopped carrying RFD TV, Cohen answered that “our local teams made a judgment that it was more important for us to add more high definition channels of popular programming like the Smithsonian Channel and the Food Channel, that those were more valuable to the customers in that market.” Cohen also said “we are primarily an urban-clustered cable company,” in explaining why RFD-TV was dropped.
Comcast/Time Warner Merger Timetable
• July 10: Public notice of Comcast’s petition to purchase Time Warner Cable starts the FCC’s 180-day clock.
• Aug. 25: Public comment period closed. 75,671 submissions received.
• Sept. 23: Responses to the comments are due.
• Oct. 8: Deadline for commenting on the Sept. 23 responses.
• Oct. 8 & 9: Comcast and TWC shareholder meetings to consider the merger and the bonus payments to TWC executives.
• January 2015: The FCC’s goal is to grant an application, set conditions, or schedule a hearing by the 180th day.
Cohen insisted that “our getting bigger is better for consumers.” He predicted that consumer will benefit because the merger will provide “more investment and technology and new services – such as faster Internet speeds, a more reliable and more secure network, net neutrality protection, low-cost Internet access, and programming diversity – to more American homes and businesses.”
Cohen’s answers don’t impress Patrick Gottsch, the founder and chairman of the Rural Media Group, the parent company of RFD TV, Rural TV, FamilyNet and Rural Radio. In an Agri-Pulse interview, Gottsch explained that it’s extremely frustrating to contend with “the disconnect between some urban executives and the issues that are important to rural America.” He said it’s frustrating because “a couple of Comcast executives used their ‘gatekeeper’ power to cut off RFD-TV service in Colorado and New Mexico” – and because “with over 57,000 of the 75,000 public comments made to the FCC being about the importance of rural TV programing and protecting rural America, there appears to have no effect on Comcast’s ‘urban-clustered’ attitude.”
Based on Comcast’s estimate that its post-merger audience will be 14 percent rural, Gottsch says that even if Comcast’s rural viewers are only 14 percent, “that is four and a half million homes and Comcast doesn’t seem to want to carry even one channel to serve those rural interests. . . . Out of the 400 channels, can’t there be at least one channel that’s totally dedicated to the news of rural America?”
In a direct response to Gottsch in August, Cohen said, “Your efforts to drive a wedge between Comcast and rural viewers as a means to promote your own business interests is unfair and grossly inaccurate.”
Meanwhile, at least one company is stepping in to fill a demand for rural news. On Sept. 8, AT&T announced a distribution agreement to deliver RFD-TV to AT&T U-verse customers. “We strive to carry content that appeals to a wide variety of audiences,” said Aaron Slator, president, content development, for AT&T. “We’re excited to be able to bring RFD-TV programming to our customers.”
In sharp contrast with Comcast, Gottsch says, “the AT&T executives reacted to the congressional hearings in Washington, D.C., by reaching out to us . . . They have followed up, they have educated themselves, and they decided that carrying RFD-TV was a good deal, especially with their interest in expanding broadband to 15 million more rural homes.”
Cohen’s “urban-clustered cable company” answer may not have impressed FCC Chairman Tom Wheeler either. Last week, Wheeler pointed out that “Americans living in urban areas are three times more likely to have access to high-speed broadband than Americans living in rural areas.” Without mentioning Comcast or the merger, he warned that “we cannot tolerate the broadband digital divide getting larger.”
Some observers say Wheeler’s warning could spell trouble for the pending Comcast/TWC merger. It also could be a signal that TWC Chairman and CEO Rob Marcus shouldn’t start spending the $81.8 million he’s been promised as a bonus for agreeing to have his company absorbed by Comcast. It’s at least possible that the FCC will either reject Comcast’s merger plans or place restrictions on the enlarged Comcast – such as Gottsch’s request for “specific conditions protecting rural and other underserved programming.” Wheeler’s warning also could affect another pending merger: AT&T’s $48.5 billion bid for DirecTV.
Explaining that “competition is the most effective tool for driving innovation, investment, and consumer and economic benefits,” Wheeler considers it important to ensure that “broadband will continue to be responsive to competitive forces.”
FCC Chairman Tom Wheeler:
“ . . . where competition cannot be expected to exist, we must shoulder the responsibility of promoting the deployment of broadband. One thing we already know is the fact that something works in New York City doesn’t mean it works in rural South Dakota. We cannot allow rural America to be behind the broadband curve. Our universal service efforts are focused on bringing better broadband to rural America by whomever steps up to the challenge – not the highest speeds all at once, but steadily to prevent the creation of a new digital divide.”
Rural TV viewers may have another ally in New York Mayor Bill de Blasio. He warns in a letter to Wheeler that “a series of similar mergers has already reduced competition in the cable and broadband sectors, leaving Americans vulnerable to increasing rates and declining customer service.” He adds that the Comcast/TWC merger “may reduce competition between distributors and programmers, with Comcast potentially favoring its own programming” and limiting independent programing, as in the case of Comcast canceling RFD-TV for Comcast’s 470,000 subscribers in Colorado and New Mexico.
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