NY Times: Comcast’s Track Record in Past Deals May Be Hitch for Merger With Time Warner Cable
In July 2013, executives from the three companies that co-owned Hulu — Comcast, 21st Century Fox and Walt Disney — had a conversation about their joint venture. Hulu, the video streaming service, had been on the auction block, and lucrative bids had come in from two Comcast rivals, AT&T and the satellite operator DirecTV, among other potential buyers.
Comcast told its counterparts that it could enhance Hulu’s value, which influenced their thinking about the fate of the service, according to several people with knowledge of the conversation, who spoke on condition of anonymity because the discussions were confidential. The issue was not money; some of the bids came in at more than $1 billion, one person said.
Within days, Fox and Disney announced that the sale of Hulu had been called off for the second time in two years.
The discussion among the companies, which took place at the Allen & Company conference in Sun Valley, Idaho, raises questions about the degree to which Comcast was trying to influence the operations of Hulu, which it acquired a stake in when it took over NBCUniversal in 2011. As part of the deal it struck with government regulators for that acquisition, Comcast had agreed not to “influence, interfere or attempt to influence or interfere” in the management or operation of Hulu. The company made similar agreements with the Justice Department and the Federal Communications Commission.
Comcast’s record of compliance involving Hulu as well as several other conditions it agreed to in the NBCUniversal deal is now in the spotlight as regulators scrutinize Comcast’s proposed $45 billion takeover of Time Warner Cable. The deal would unite the country’s two largest cable operators, controlling just under 30 percent of the pay television subscribers and 35 to 50 percent of the nation’s broadband Internet service, depending on how regulators define the market.
The Justice Department is evaluating whether the merger is anticompetitive and is scheduled to meet with Comcast on Wednesday to discuss it. The F.C.C. is considering whether the deal is in the public interest, and regulators in New York and California are also examining it.
Should regulators approve the merger, they will most likely place conditions on it. How Comcast complied with the conditions of the NBCUniversal merger provides a window into how the company is likely to behave, some analysts and critics have said.
“The track record is bad on conditions,” Senator Al Franken, a Minnesota Democrat who has urged regulators to block the deal, said in an interview on Tuesday. “They can’t be trusted, and they shouldn’t be.”
A Comcast spokeswoman, Sena Fitzmaurice, said in a statement on Tuesday, “Comcast had no role in making, evaluating or reconsidering any management decisions at Hulu.”
She added: “The decision not to sell Hulu was made only by the members of their managing board on which Comcast does not sit and has no role. At the time of the decision, executives of both Disney and Fox discussed publicly their compelling reasons not to sell.”
Mr. Franken has been a vocal critic of the deal since it was announced last year. In an op-ed published this week, he pointed to a several issues related to the company’s compliance with the conditions that it agreed to as part of its NBCUniversal acquisition. Those include a fine by the F.C.C. for violating an agreement to create a stand-alone broadband product for people who wanted to subscribe to Internet service but not television. While Comcast offered the service, it was found to not actively promote it.