Merger: Comcast Acquisition of Time Warner Cable

Background

In April 2014 Comcast, Time Warner Cable, and Bright House Networks jointly filed an Application with the CPUC for transfer of control of Time Warner and Bright House Networks to Comcast. The CPUC subsequently consolidated with this proceeding Comcast's June 2014 Application seeking to transfer Charter Communication’s California customers and assets to Comcast. 

  • Comcast is a media and communications company with network facilities in California and 38 other states. It is the largest broadband service provider in the United States for video, high-speed-Internet, and voice services to residential and business customers. Comcast is also a major media content company and owns NBC-Universal.   
  • Time Warner Cable provides video, high-speed Internet, and voice services to residential and business customers. It has network facilities in California and 30 states.  
  • Bright House Networks utilizes wholesale services via its affiliate Bright House California to provide VoIP, video, and broadband services to subscribers throughout its cable franchise areas, which include Bakersfield and Kern County. 
  • Charter Communications provides traditional cable video services (basic and digital), advanced video services, high-speed Internet services, and voice services to more than six million residential and business customers in 29 states, including California. 

On August 14, 2014, the CPUC issued the Scoping Memo determining that Joint Applicants' application warranted a more extensive review into the impact of the Merger on California customers and directing Comcast, Time Warner, and Bright House to respond to a number of questions. The CPUC’s discovery process concluded on October 1, 2014.  

CPUC Proposed Decision

On February 13, 2015, the CPUC issued a Proposed Decision granting applicants' request to merge, including 25 conditions outlined in Appendix A. The Proposed Decision acknowledges that the Merger is more than a company name change and that Time Warner customers could see the quality of their service decline as a result of the merger. The Proposed Decision further recognizes that Comcast’s increased market share for broadband service provides it with increased leverage over Internet content. Accordingly, the Proposed Decision recommends 25 conditions intended to mitigate the harms of the proposed merger, such as addressing: 

  • LifeLine program offerings 
  • Diversity goals 
  • Backup batteries 
  • Broadband deployment and low-income broadband access customer services  

Alternate Proposed Decision

On April 10, 2014, CPUC Commissioner Michel Florio issued an Alternate Proposed Decision denying the Merger: 

  • Determines applicants' did not meet their burden of proof that the proposed merger did is in the public interest. 
  • Finds parties made a convincing showing of anti-competitive harm and post-merger increased market power for Comcast. 
  • Finds reduced potential of consumer choice in voice services and negatively impacts the deployment of broadband in California. 
  • Asserts the Proposed Decision’s 25 conditions do not fully mitigate the harms of the merger. 
  • Grants TURN’s motion to transmit the CPUC record to the FCC as quickly as possible. 

 

CPUC Public Meeting

CPUC Commissioners Peterman and Sandoval held an All Party Meeting on the Merger on April 14, 2015, which included an opportunity for public comment. See the Meeting Agenda  

 

Motion to Withdraw the Merger Application

On April 29, 2015, Comcast and Time Warner filed a Motion with the CPUC to withdraw its Application request to merge. The Joint Applicants filed their Motion because they had formally withdrawn their merger proposal at the FCC, given that it appeared clear that neither the FCC nor the Department of Justice would approve merger.   

 

CPUC Decision on Motion to Withdraw

In July 2015 the CPUC issued a Decision granting the carriers' Motion, with conditions. 

 

 

ORA Position

ORA urged the CPUC to deny the Comcast Merger because the communications companies have not demonstrated that the proposed merger is in the public interest.  

ORA appreciates that the CPUC’s Proposed and Proposed Alternate Decisions found that ORA’s analysis was convincing in that harmful consequences may result on the deployment of broadband in California due to Comcast’s post-merger market power. However, the 25 conditions in the CPUC’s Proposed Decision, or any other conditions, could not mitigate these harms to the public since they lacked sufficient monitoring and no mechanism to effectively enforce them. In order to accomplish several of the proposed conditions, a merger would not be required. Further, the proceeding did not allow for parties to have input into the 25 conditions as part of the evidentiary record.  

ORA’s analysis found that a post-merger Comcast would create a near monopoly situation, with Comcast having:  

  • Broadband access to more than 84 percent of all homes in the state.  
    • Of this 84 percent, 78 percent of customers would have no other choice but Comcast for broadband services, based on the FCC’s minimum download speed definition of 25 Mbps.   
  • Unchecked market power to raise prices and require usage-based pricing and/or bandwidth caps.  
  • Ability to act as a gatekeeper for Internet content, including the market for over-the-top video services.  
  • Control the broadband pipes, and therefore, the flow of content to an overwhelming number of Californians.    

Ultimately, the CPUC's Decision granting Comcast-Time Warner's Motion to Withdraw their Application, adopted ORA's recommendation that requires the record of the merger proceeding to be preserved. 

 

See ORA’s Fact Sheet on the Proposed Merger. 

 

ORA supports TURN’s February 18, 2015 Motion requesting the CPUC transmit the confidential record developed in the CPUC’s proceeding to the FCC.  

See ORA's July 7, 2015 Comments on the Proposed Decision on the Motion to Withdraw the Merger Application. 

 

See ORA's May 4, 2015 Comments to the Alternate Proposed Decision. 

See ORA's May 11 2015 Reply Comments to the Alternate Proposed Decision. 

 

See ORA's March 5, 2015 Comments on the Proposed Decision. 

See ORA's March 10, 2015 Reply Comments on the Proposed Decision. 

  

See ORA’s February 24, 2015 Response supporting TURN’s Motion.  

  

See ORA's December 10, 2014 Brief. 

See ORA’s May 19, 2014 Protest of Comcast’s merger application. 

 

 

Proceeding Status

The Proceeding is closed. 

See the Proceeding docket. 

 

 

Other Resources

FCC's Docket for the Proposed Comcast-Time Warner Merger  

CPUC’s investigation into Comcast regarding violation of privacy. 

City of L.A.’s Law Suit against Time Warner for failure to pay franchise video fees. 

ORA’s Net Neutrality Webpage. 

ORA’s Fact Sheet on the Proposed Merger