Broadband Cable Association of Pennsylvania


March 28, 2014

Associate Professor Joel Maxcy argues the Comcast acquisition of Time Warner Cable will mean "higher prices and fewer choices," but the facts he uses are wrong in nearly every instance. The Comcast-TWC deal won't reduce consumer options at all since the two companies operate in separate markets.

While he argues against "exclusive markets" in the cable business, there aren't any today and there haven't been for decades. Satellite and fiber options provide consumers with choice, as evidenced by the growth of the satellite market by 7 million subscribers since 2005. Telecom companies such as AT&T and Verizon have added 10.7 million subscribers, during a time when cable lost more than 10 million subscribers. That trend is expected to continue post-merger, as Google guns for market share through its recently announced plans to build high-speed fiber in up to 34 communities. The Comcast-TWC deal will change nothing in this regard and the merged company expects to have only 30 percent of the overall market.

Maxcy's letter is misleading about competitiveness and speeds in U.S. broadband. We are one of only two countries with three competing broadband technologies deployed and operational (cable, DSL, and wireless), and 88 percent of U.S. households have a choice of two or more wired broadband providers. We have the most affordable entry-level wired broadband among the 18 European countries, the United States and Canada that together make up the Organization for Economic Cooperation and Development, and 85 percent of American households have access to wired broadband networks capable of 100 Mbps or more.

Contrary to Maxcy's statements, the transaction will not disadvantage online video services such as Hulu and YouTube. Comcast's NBCUniversal has widely licensed its programming to multiple online video distributors. Revenue from online video services has grown from $1.86 billion to $5.12 billion in the last three years. Comcast has a record of supporting independent programming and also supported the 2010 Federal Communications Commission rules on network neutrality that were recently invalidated by the federal courts. It is the only Internet Service Provider still bound by an agreement to abide by the rules even in the wake of the court ruling.

Contrary to Maxcy's contention, Time Warner Cable customers will, as a result of this transaction, get something they don't have today - faster broadband service. Comcast currently offers speeds five to ten times faster than TWC. TWC customers also will get access to more high-definition channels, along with more streaming and on-demand options for all their devices. Low-income residents in TWC legacy markets will receive access to the company's Internet Essentials broadband adoption program, extending an initiative that has connected more than a million Americans to the Internet in their homes.

As Comcast continues to invest in the Philadelphia region with plans to build a second skyscraper in the city as its national footprint grows, business leaders here have a vested interest in making sure we keep our facts straight.

Sincerely, Bernard Dagenais, President & CEO, The Main Line Chamber of Commerce - Letter to editor of Philadelphia Business Journal

Get ready for big changes to how Philadelphia Phillies games are viewed on television. A 25-year, $2.5 billion TV rights contract between Comcast SportsNet Philadelphia and the Phillies goes into effect this season, with even more of the National League team's games shifting from over-the-air to pay TV. Somewhere between 33 and 40 games that had been available on free broadcast TV will now be shown on CSN Philadelphia, and the regional sports channel wants cable companies to pay an unspecified surcharge for each subscriber to its system - or face a potential blackout of those additional games.

As of Thursday, Comcast Cable's Xfinity TV - the dominant cable provider in central Pennsylvania - agreed to pay the fee, as did Blue Ridge Communications, which has subscribers in parts of Perry, York and Lancaster counties. It's not clear if CSN Philly will remain available to Verizon FiOS customers in the region, according to an email from spokesman Lee J. Gierczynski. "We are in discussions with Comcast SportsNet Philadelphia but no deal has been reached at this time," Gierczynski wrote. "Verizon always works with content owners and programmers, and our goal is to reach mutually beneficial agreements that ensure our customers enjoy the best programming on FiOS TV." CSN Philly, which debuted in 1997, has never been carried by DISH Network or DirecTV.

Under terms of the new Phillies' TV deal, less than 20 games will be made available via over-the-air broadcast outlets, and the Philadelphia flagship station slated to carry 12 of those games is changing from WPHL-TV (Channel 17) to WCAU-TV (Ch. 10). WLYH-TV (Ch. 15) has carried games in the Harrisburg-York-Lancaster-Lebanon market for years. As of Thursday, a station spokesman said negotiations are ongoing but there was no deal in place for the 2014 season. The potentially blacked-out games in question are above and beyond the normal slate of approximately 100 Phillies game already part of previous CSN Philly broadcast deals. Fox, TBS and ESPN also have national baseball TV deals, which could involve Phillies games.

During each CSN Philly game, local cable or telco operators have windows of advertising they sell on their own, independently from the sponsorship packages the network sells. Local providers keep those advertising dollars for themselves, so CSN Philly's proposed surcharge is a way for the network to recoup some of that money to help finance the cost of acquiring the games in the first place. Ultimately, when programmers ask providers for more money, that expense gets passed along to pay TV subscribers. Asked for CSN Philly's position on the matter, Tim Buckman, vice president of strategic communications for NBC Sports Regional Networks, provided this statement Thursday: "Comcast SportsNet is proud to offer viewers additional Phillies games in 2014 and pleased that we've already reached agreement with the vast majority of our affiliate partners. We are in negotiations with a remaining few and believe they recognize the value these additional games present to their customers."

A Philadelphia Inquirer story earlier this week - citing a report from financial services firm J.P. Morgan - said CSN Philly was the sixth-most-expensive regional sports network in the U.S., costing cable companies $3.90 a month per subscriber. That cost is then passed along to customers, and CSN Philly's fee is significantly more than most general-interest national cable channels. "Sports have emerged as far and away the most valuable entertainment programming in the U.S.," according to Alexia S. Quadrani, managing director and media analyst with J.P. Morgan. "Advertisers increasingly turn to sports to reach large audiences." The report said Madison Square Garden Network, at $5.44 a month (or about the monthly cost of ESPN) tops the list as the most expensive regional sports network. Bob Grove, director of public relations and community affairs for Comcast's Keystone Region, said the company had no planned billing increases at this time.

Joe Lorah, corporate director of marketing and customer service for Blue Ridge Communications, said his company didn't flinch at CSN Philly's request. "We agreed to terms to pay the additional fee to carry the games," Lorah said. "Sports fans are passionate and want to see as many games of their team as possible. We do what we can to get them what they want. "Under this deal, they will see an additional 33 games on Comcast SportsNet the network didn't cover before."

Lorah could not say how much more Blue Ridge subscribers would pay each month because of the agreement with CSN Philly. "Programming by far is our No. 1 cost and makes up the majority of a subscriber's monthly bill," Lorah said. "Regional sports networks tend to be the highest programming costs for us. We do what we can to keep fees low, and when we negotiate with programmers, we try to keep the fees low. When they go up, those costs eventually get passed along to the subscriber. "As for this particular instance, I would say this agreement as well as others being negotiated now will result in an increased cost to subscribers. Right now, I don't know what the rate would increase."

Charter Communications Inc. urged Time Warner Cable Inc. investors not to endorse a takeover by Comcast Corp., setting up a battle for shareholder votes. Comcast, which outbid Charter this year with a $45 billion stock offer, is too susceptible to regulatory hurdles because it's the biggest in the cable industry, Charter said today in a filing. Time Warner Cable, meanwhile, refused to engage with Charter to develop a merger deal, Charter said. The proxy filing shows Charter isn't backing down in its pursuit of Time Warner Cable without a fight. Charter and Comcast have each pursued a takeover of the second-largest U.S. cable carrier to reduce costs and gain greater leverage in negotiations with networks like CBS Corp. and Viacom Inc. Based on the value of its shares, Comcast's merger offer was worth $158.82 a share when it was announced Feb. 13. That figure has fallen to $141.16 a share as of yesterday as Comcast shares have declined, Charter's filing said. Bloomberg

The four Democratic gubernatorial candidates will meet in Philadelphia to answer a moderator's questions at the annual convention of the Pennsylvania College Democrats. Friday's two-hour forum at Temple University begins at 7 p.m. Participating will be state Treasurer Rob McCord, former Clinton White House environmental adviser Katie McGinty, U.S. Rep. Allyson Schwartz and businessman Tom Wolf. All live in Montgomery County, except for Wolf, who lives in York County. The winner of the May 20 primary election gets the Democratic Party's nomination to challenge Republican Gov. Tom Corbett in the Nov. 4 election. The Democratic candidates largely agree on the issues, including expanding Medicaid under the 2010 federal health care law, raising the minimum wage, boosting funding for public schools and raising taxes on the booming natural gas industry. Associated Press

Quotable: "I don't have the financial resources of other candidates but I would hope sooner, rather than later." - Former state Auditor General Jack Wagner, a late entrant to the Democratic primary election for governor, when asked at a forum on Sunday when he planned to air campaign commercials. Wagner dropped out of the race on Wednesday. Philadelphia Daily News