That protracted fight marked the last time there was a major new competitor brought into the pay-television business and it had a profound effect on the market. The second and third-largest providers of pay-TV service—DirecTV and Dish Network Corp.—are both satellite companies.
Today, the debate is about extending those “program access rules” to online content distributors—a condition that has been suggested for approval of the merger.
Comcast will “wield a powerful mechanism to retain its video services revenue stream by killing off emerging Internet-based competition before it can even get off the ground,” reads a joint filing by the Consumer Federation of America, Consumers Union, Free Press, and the Media Access Project.
The filing points to Vuze, a company that tried to create an online TV company, “but lacked access to much premium content.” After many years and more than $34 million in private equity, Vuze abandoned its first business model of competing with cable TV distributors, according to the filing.
When asked directly about whether Comcast would oppose extending program access rules to online providers, Fitzmaurice pointed to a footnote in a Comcast filing with the FCC that said that such a move “could stifle investment and innovation and would raise extremely complex issues involving a wide range of stakeholders.”
The short answer: over this deal’s dead body.
Roberts has warned analysts that if regulators attach conditions to their approval of the deal that he considers “material,” he will walk away. Unlike many merger deals, this one requires no “breakup fee,” so Roberts won’t pay a penalty if he decides to break off the courtship because he doesn’t like the way Washington winds are blowing.
Although the transaction has been scrutinized in numerous congressional hearings—four on Capitol Hill, one each in California and Chicago, plus a FCC public forum, also in Chicago—experts say few in Washington have the stomach for the kind of fight the satellite guys had over the program access rules.
Comcast, which counts seventy-eight former government employees as lobbyists, has spent heavily to convince members of Congress to support the deal. In the second quarter of 2010, the company spent $3.82 million on lobbying—the most it has spent in single quarter. Comcast has convinced a large number of lawmakers to support the deal. Bloomberg News reported that ninety-one House members and three Senators who received Comcast campaign contributions have written letters to the FCC supporting the merger.
Wisconsin Senator Herb Kohl, the Democratic chairman of the Senate Judiciary Committee’s subcommittee on antitrust, has been a persistent pain in Comcast’s neck regarding the merger. He has suggested rules akin to those that allowed the satellite industry to flourish be attached to this deal’s approval.
Among Comcast’s lobbying hires? Kohl’s former long-time chief of staff, Paul Bock of Capitol Hill Strategies. Bock registered to lobby on behalf of the merger on September 1, 2009.
Despite Comcast’s considerable political and financial might, the drift toward online television viewing is strong. Once upon a time, our grandparents couldn’t see the sense in paying for cable, said Crawford. Now a younger generation has started an online revolution that threatens to upset the stability of the entire television industry.
“They can’t avoid it forever,” she said of Comcast. “And they know that. But they can stave it off.”