Bloomberg news reported this week that Comcast Corp. has agreed to acquire Time Warner Cable Inc. for $45.2 billion, combining the two largest U.S. cable companies in an all-stock transaction.
While this provides a big bump in value for Time Warner Cable shareholders (price offered is 17 percent premium on previous day’s closing price) Comcast shareholders and customers are likely in for a bumpy ride. Knowing that this deal faces FCC approval, Comcast senior management has launched a major PR campaign to try to gloss over the continuing service and sales strategy issues that consistently place Comcast at or near the bottom of the rankings in customer service, loyalty, advocacy and satisfaction rankings.
While of USA Today says: “For customers, there’s a potential for improved service, too. Comcast has spent billions on new high-tech Xfinity set-top boxes and ‘TV Everywhere’ services,” I’m skeptical. Comcast seems satisfied to spend their money on PR and lobbying (reporters, Neilson, FCC…) rather than investing in improving customer satisfaction.
In an example of said PR spin, Comcast CEO Brian Roberts stated:“What unfortunately happens is we have about … 350 million interactions with consumers a year, between phone calls and truck calls. It may be over 400 million and that doesn’t count any online interactions which I think is over a billion. You get one-tenth of one-percent bad experience, that’s a lot of people – unacceptable. We have to be the best service provider or in the end, this company won’t be what I want it to be.”
Which I will paraphrase as “We are a victim of our own success. We have so many customers that even a minority is loud. We have to be the best service provider to silence the minority.” Not real clear on the last sentence – clearly they are not the best service provider by a long-shot so does that mean that Comcast is not the company that Brian Roberts wants it to be?
Further, as Tim Cushing of TechDirt notes, based on Robert’s assertion that Comcast’s services issues are a function of the size of its customer base – the problem will get worse, not better with the acquisition of Time Warner. Cushing provides credible evidence that Comcast is angling to eliminate the fast forward capability on DVR recordings and to quietly ad usage caps on broadband services with steep overage charges. Not exactly customer friendly but with less and less competition – what’s to stop them? Only the regulators.
If the deal passes regulatory scrutiny, the merged company would account for almost three-quarters of the cable industry, according to the National Cable Television Association. Given Time Warner’s reputation for strong arm tactics such as blocking local channels from being carried on their cable network, the Comcast reputation for “don’t service and don’t care” and the fact that the CEOs of both companies are apparently pals, their combined size would simply give them more scale and clout to raise prices and lower service. Isn’t this what anti-trust laws were enacted to avoid?
Elizabeth Gooding is the editor of the Insight Forums blog and president of Gooding Communications Group www.GoodComm.net
