Ralph de la Vega President CEO of ATT Mobile Business Solutions. Source Flickr user Dak Dillon
When it comes to press coverage there's probably no starker contrast in today's merger environment than Comcast (NASDAQ CMCSA ) and Time Warner Cable's (NYSE TWC ) plans as opposed to ATT's (NYSE T ) efforts to buy DirecTV (NASDAQ DTV ) . The former have a dedicated coalition with a pop up website and multiple tech sites exhorting the Federal Communications Commission to reject the proposed merger while the latter has largely flown below the radar.
Some of the opposition to Comcast's merger plan has an obvious source success breeds contempt. The Stop Mega Comcast coalition argues that a combined Comcast and Time Warner would boast over 50% of the broadband Internet market while WebpageFX notes that post merger the combined entity would be the largest ISP in 26 states with co ownership of the largest in two others.
Additionally Comcast would control roughly 30% of the U.S. pay TV market post merger leading DISH Network and various TV networks to complain about potential monopsony power. Interestingly enough as a combined entity ATT/DirecTV would have a similar number of pay TV subs but would trail Comcast/Time Warner's scale in Internet as DirecTV lacks an in house broadband solution.
But there's also another reason why analysts have taken to giving ATT a pass the company has been better at controlling and managing consumer expectations during the process. For example ATT executive Ralph de la Vega recently gave consumers another reason to root for its DirecTV deal in an interview with Fierce Cable ATT's goal is make it much easier for consumers to get TV content on their smartphones and tablets without having to worry about whether or not they will be able to do so because of content rights.
I hope Comcast is taking notes. Right now the success of its proposed merger with Time Warner Cable could hinge on convincing subscribers it is in their best interest and Comcast has done a poor job to date of convincing customers.
Horrible communicationFor Comcast and Time Warner Cable it can be argued their poor corporate communication is mostly to blame for the scrutiny they are receiving. While pay TV providers get blamed for every price increase in most cases they are simply passing along their content costs to subscribers.
Led by the massive increase in sports related programming rising content costs have forced pay TV providers to charge more. At one point Liberty Media president Greg Maffei called ESPN's exploding price increases a tax on every household. That was in 2011.
Fast forward to today and both companies are still doing a poor job explaining the industry to subscribers in a time when consumer buy in is desperately needed. There's potential upside for subscribers of a combined Comcast/Time Warner Cable but the company needs to make the argument.
See the combined entity should be able to use its size and scale to hold down the growth of content costs. Right now the companies are negotiating against themselves to secure deals with Disney's ESPN (and all other cable networks) but once they combine to control 30% of the total pay TV market they could gain more leverage. In addition the combined entities could lower operating costs by synergies and redundancy reductions to hold down broadband Internet costs.
But instead of making this salient argument stories of poor and disrespectful customer service have filled the void amid floundering attempts to fix this long standing issue. Although its members aren't elected the FCC is sensitive to citizen feedback. Comcast and Time Warner need to start making their case to the American public addressing the rising costs of content and pointing out possible Internet related merger synergies would be a good start.
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