Franken's view hurt Comcast's big deal

The collapse of Comcast's deal to acquire Time Warner Cable for $45.2 billion in stock could turn out to be one of the big wins in the career of Sen. Al Franken of Minnesota, one he called "gratifying."

But it's not like he was quarterback of the winning team. More like the head cheerleader.

Comcast abandoned its transaction last week in the face of opposition by federal antitrust lawyers, who were the real decisionmakers on this deal. They were concerned about what would happen to customers if one company controlled nearly 57 percent of the high-speed Internet market.

And there was Franken, cheering them on.

Calling him a cheerleader, by the way, is not to diminish the role he played. U.S. senators really do influence these decisions, as Comcast obviously realized, given the $21.6 million it spent on lobbying Congress from the time the deal was announced through the end of March.

What Comcast was after was statements of congressional support. Obtained by whatever means, including campaign contributions, the thumbs up of elected officials helps create the impression that the proposed deal really must be in the best interest of consumers.

That makes it far easier for the regulators to let a deal proceed.

"The environment allowed the [regulatory] staff just to focus on the merits," said John Bergmayer, senior staff attorney for the advocacy group Public Knowledge, an opponent of the deal. "They didn't have to worry about the politics, because the politics wasn't pushing the discussion in any direction."

Franken eventually was joined by other senators in opposing the merger, but he said he was against it from the time he first heard of it.

His first reaction was simply "too big," he said. He knew of Comcast's size and roughly the size of Time Warner, and he could not imagine how bringing the two companies together could be sold as good for consumers.

Franken worked in media before he ran for office, and he remains very interested in how entertainment gets distributed. When this deal was announced, he was already a Comcast critic, having been an outspoken opponent of an earlier Comcast deal, the 2011 acquisition of a controlling interest in NBCUniversal.

This had been a different kind of deal than the proposed Time Warner Cable acquisition, as Comcast, a distributor of television channels, would own a producer of them. But it was still a case of a big company that could use its power in the market in a way that sure didn't benefit consumers.

As far as he's concerned, Comcast agreed to play fair and then simply didn't. In one well-known example, the media company Bloomberg brought a successful complaint because of where Comcast put Bloomberg TV on its lineup of channels.

Comcast had agreed to put channels that were like each other all in the same neighborhood, so subscribers should have found Bloomberg TV right next to Comcast's own business news channel, CNBC. Comcast instead stuck Bloomberg TV in "the boondocks," the senator said.

"If they have this kind of power that they can exert over the market, they are going to use it," Franken said. "They have never shown an unwillingness to use their power. Ultimately that was going to mean higher prices and less choice and, if possible, even worse service."

What's really interesting about this case is how much changed in the industry just since the time the deal was announced early last year. At the start, the debate was over cable TV. It ended as a debate about who controlled high-speed Internet access.

Comcast is certainly aware of how many cable TV subscribers have ditched its service in favor of other ways to receive the shows they wanted to watch. It was clear from the outset that Comcast wanted to get bigger in part to make it easier to invest in the kind of services that would fend off emerging threats. It wasn't talking about other cable TV companies but AT&T, Google, Amazon.com and Netflix.

Blockbuster was once the largest of the video rental chains. Blockbuster abandoned its bid for a big competitor named Hollywood Video after it looked clear that a government agency wouldn't approve it, just like what happened in the case of Comcast.

Even by the time the Blockbuster deal was scuttled, however, an upstart named Netflix was already mailing lots of DVDs to customers who had selected them over the Internet. The founders of YouTube had just gotten that company off the ground, and watching video over the Internet was about to become a thing ordinary folks did.

Blockbuster never really figured out how to respond to these competitive threats and is now history. The important thing to note, though, is that the story of Blockbuster, a potential monopolist feared by the government, doesn't come from the distant past. It happened just 10 years ago.

lee.schafer@startribune.com • 612-673-4302