Comcast's Press Was Good — and Bad

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Depending upon what you read last week, Comcast Corp. is either a greedy, monopolistic behemoth that could care less about its shareholders or the finest cable operator in the business.

The spin machine was in high gear as news outlets, returning from the July 4 holiday — and a slow business-news week — caught word about one of the largest-ever proposed cable mergers.

It only takes a paragraph to sum up the solid news around the deal: Comcast proposes a $53 billion acquisition of AT&T Broadband. AT&T says it'll think about it. Liberty Media Group Inc. chairman John Malone quits the AT&T Board because he's upset that no one told him about the talks.

But in the 400-plus stories worldwide that showed up in the Lexis-Nexis database by Thursday night, every possible angle was covered. Some said that the Roberts family's record bodes well for improving poor margins on the AT&T systems, while others said consumers would be the big losers on the deal.

Some of the coverage was simply amusing. On Tuesday, the New York Post, quoting "cable insiders," reported that "Comcast's push to gain control of AT&T's cable assets has [Liberty Media chairman John] Malone written all over it."

The next day, Malone announced he was quitting the AT&T board because he was "excluded" from the Comcast talks. Malone also wrote in his AT&T resignation letter that the Comcast bid was "insufficient," yet media outlets reported on Thursday that Malone told reporters at the Allen & Co. media conference that "the deal would make a lot of sense."

Some of the harshest criticism of the deal came in a Thursday column in The Wall Street Journal
by venture capitalist Andy Kessler, in which he said the deal is a Comcast "smokescreen" and "cable is an entire industry structured around tax avoidance." Comcast only proposed the deal as a way to keep Brian Roberts employed, he adds.

Roberts may find solace in reading a 1993 piece Kessler wrote in Fortune
on then Tele-Communications Inc.'s proposed merger with the former Bell Atlantic Corp. Cable was overvalued at $2,000 per sub, and John Malone was selling out to Bell Atlantic because he was terrified by the competition, including microwave operators (which later bombed), electric and water companies and other providers, Kessler said.

Comcast's dirty laundry was hung out in several publications last week. Consumer groups cautioned that the company's refusal to offer Comcast SportsNet — its fiber-distributed Philadelphia regional sports network — to satellite and overbuilder competitors proves that "Comcast is a bad actor in an industry that has abused the public," as Consumer Federation of America director Marc Cooper put it to
The Atlanta Journal Constitution.

Slate.com's Rob Walker also picked up on the SportsNet angle. "I'm less convinced that it will mean anything for cable consumers apart from the opportunity to buy a larger number of expensive services without any real price break for their personal contribution to the 'synergy' of the deal," Walker wrote. "Early reports on the proposed AT&T deal all note that in Philadelphia, Comcast controls the rights to much local sports programming and blocks a satellite competitor from using it."

None of the reports mentioned that some of Comcast's cable competitors also have exclusive programming, such as DirecTV Inc.'s lucrative "NFL Sunday Ticket" football package.

Consumer Union president Gene Kimmelman told Knight-Ridder news service that — based on SportsNet exclusivity and Comcast's moves against RCN — "we are fearful they will take an anti-business approach and extend it to one-third of the country to undercut competition." That story was picked up by The Philadelphia Inquirer
and The San Diego Union-Tribune.

On the positive side, several articles suggested that Comcast may be able to do a better job running the AT&T systems, including a New York Times
story which said that analysts were impressed with Comcast's cash-flow margins of 41 percent, compared to 18 percent margins at AT&T.

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