New York Regulator Seen Moving Closer to Conditional Approval of Comcast/TWC Deal
The New York Public Service Commission (PSC) is moving closer to a decision in its review of the proposed Comcast/Time Warner Cable (TWC) deal, with industry observers telling us they believe recently filed recommendations from the Department of Public Service (DPS) staff signal the PSC could approve the merger, though with significant concessions. Public interest groups opposed to Comcast/TWC said they continue to support full denial at the state level rather than extracting concessions. New York raised the state regulatory requirements earlier this year for cable franchise deals like Comcast/TWC, with the law now requiring applicants to show a deal would be in the public interest rather than requiring the PSC to approve deals unless it could prove harm to the public interest (CD March 21 p15). The PSC will factor the DPS staff comments and other filings into its decision, which it expects to announce at its Oct. 2 meeting, a spokesman said.
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DPS staff said in its comments that Comcast/TWC would provide “no net positive benefit” to New York as its original terms now stand, recommending that the PSC require the combined company to provide $300 million in net benefits to the state in order to secure approval (http://bit.ly/XY2bHF). The proposed conditions include requiring a combined Comcast/TWC to improve its J.D. Power and Associates-measured customer satisfaction scores, citing the companies’ customer service records as a “serious concern.” The combined company should reach a 686 score for Internet service and 696 for residential TV by the end of 2016 and maintain those scores for at least five years post-merger, DPS said. J.D. Power measures customer satisfaction scores on a 1,000-point scale.
The combined Comcast/TWC should be required to expand its low-income broadband offerings, including expanding the pool of people eligible to use Comcast’s Internet Essentials program and creating a New York Essentials broadband program for state Lifeline participants who don’t meet Internet Essentials eligibility requirements, DPS said. The combined company should also be required to raise its download and upload speeds for TWC’s current Everyday Low Price broadband service, DPS said. The combined company should also commit to offering “a more robust standalone broadband offering” separate and competitive with fully bundled offerings, DPS said.
The combined Comcast/TWC should commit to $50 million in infrastructure investments targeted at the state’s underserved and unserved areas, including rural communities, industrial and commercial areas, and public institutions, DPS said. The staff also recommended the combined company commit to not reduce non-headquarters staff in New York “disproportionately to the state’s portion of the combined company’s territory,” and recommended the combined company establish a job training program in connection with the State University of New York system.
The DPS recommendations are “a more aggressive stance than most states take in cable mergers,” said Guggenheim Partners analyst Paul Gallant. “But the fact that the staff has given a lot of thought to merger conditions seems like a pretty good sign that the deal will be approved.” The strengthened New York merger law has clearly made it tougher to demonstrate a deal is in the public interest, but it hasn’t made it impossible, said an industry lawyer not connected to the Comcast/TWC deal. A Comcast spokeswoman didn’t comment specifically on the New York PSC’s regulatory review, but said “the process is proceeding in the states and there’s nothing out of the ordinary in where we are in the process."
The DPS recommendations are “very good conditions,” said Paul Goodman, legal counsel for The Greenlining Institute, which has opposed Comcast/TWC in California and also plans to oppose the deal at the FCC. “I don’t think they're everything we need, but I think you'll see these sorts of requests from almost everyone who opposes the merger. You're going to see a pattern of these conditions over and over again.” The recommendations don’t signal that the PSC is certain to approve the merger because Comcast/TWC “faces a lot tougher fight than people might think, but the strategy I would take is that we don’t want to see a merger, but if there’s going to be a merger there are some minimum things we need to do to protect consumers. It’s a pretty typical strategy.”
Free Press remains focused on “blocking the merger, not conditioning it,” said Policy Director Matt Wood. Comcast has issued its own voluntary commitments to entice state and federal regulatory approvals, but none of them “come even close to changing that public interest analysis,” he said.