WASHINGTON – Members of Congress use hearings and letters to wield influence over corporate mergers — and that was certainly the case with Sen. Al Franken, D-Minn., and the failed Comcast-Time Warner Cable deal.
In attacking the proposal, no lawmaker was a bigger player than Franken, who sent three letters to regulators and caught a Comcast executive in an embarrassing obfuscation at a Senate committee hearing.
Comcast is the dominant cable provider in Minneapolis, but Franken said his interest in the issue stems from his own past in the entertainment business as an actor on NBC's "Saturday Night Live." He argued that media consolidation, in particular combinations of content providers and content creators, raises prices and diminishes content quality.
When Comcast's acquisition of Time Warner was announced in February 2014, conventional wisdom had it that Comcast's lobbying and its generosity to members of Congress would ease the path to completion. Comcast gave $5 million to candidates in the last election cycle, placing it among the top corporate donors. Its political action committee was more generous than those of all but five other firms. Its $17 million in lobbying spending in 2014 was No. 1 among corporations.
But the company's political spending did not translate into congressional support. Besides members of the Pennsylvania delegation — Comcast's base — only Sen. Orrin G. Hatch, R-Utah, wrote to regulators to support the deal.
And then there was Franken. The issues he raised turned out to be prescient. In a February 2014 letter to Federal Communications Commission Chairman Tom Wheeler, Franken said the FCC — which must approve media mergers — should look closely at the issue of net neutrality and Comcast's adherence to it. That's the principle that Internet providers should not be allowed to slow or block Web pages of content companies.
He also argued that regulators should scrutinize Comcast's compliance with the conditions it accepted when it was allowed to buy NBC Universal in 2011.
Franken said he was confident that regulators would find that "Comcast has a history of breaching its legal obligations to consumers."
Comcast announced that the Time Warner deal was off on Friday morning. "Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn't agree, we could walk away," Comcast chief executive Brian L. Roberts said.
Franken's net neutrality argument played a role. The idea that one company would control so much of the Internet service market didn't sit well as the Obama administration tries to get a better handle on the power exerted by Internet service providers. The administration supported the FCC's decision in February to assume regulatory powers over them.
Comcast and Time Warner responded that the two firms operate in different markets and said that there would be no net loss of competition if they were combined. And they said that Comcast would have improved Time Warner's infrastructure to provide better Internet service. They also said they would never violate the net neutrality principle.
But Franken noted that it was a 2007 move by Comcast to slow down content produced by a prospective competitor that had helped to create the groundswell of grass roots support for net neutrality.
He also pointed out that when Comcast's purchase of NBC was approved, Comcast had used the existence of a big competitor, Time Warner, as evidence that it would not be able to charge other cable operators more to carry NBC and its 20 cable networks.
"We can't say that the existence of competition among distributors, including Time Warner Cable was a reason to approve the NBC deal in 2010, and then turn around a few years later and say that the absence of competition with Time Warner Cable is a reason to approve this deal," Franken said at the Judiciary hearing in 2014.
