Comcast's bid to win over regulators for its proposed merger with Time Warner Cable has mostly focused on Washington, where the cable company has testified before Congress, met with officials and given millions of dollars in political donations. But this week, Comcast is devoting its attention to regulators a little farther north of the nation's capital. And wooing these folks will be no less important to the merger's outcome.
Since recent changes in the state's cable franchise laws, New York has vowed to take a close look at the Comcast-Time Warner Cable merger. In May, Gov. Andrew Cuomo pledged a "hands-on review" of the proposal, and on Thursday, the state public service commission (PSC) will hold the last of three hearings this week to consider the acquisition.
If Comcast fails to convince state regulators that buying up Time Warner Cable (TWC) would benefit consumers, the PSC has the power to block the merger from happening within the state, says Brad Ramsay, the top lawyer for the National Association of Regulatory Utility Commissioners.
"They can't stop the entire merger, but they can stop the part that involves facilities in the state of New York," Ramsay said in an interview. "Would that require [Comcast] to go back to the drawing board? Well, if it's central to the synergies in this merger, sure."
How important is it that Comcast get New York's blessing? Look at it this way: Comcast has a fraction of the customers in New York that TWC has — 23,000 versus more than 2.5 million. Considering that the entire merger nationwide would give Comcast control over 30 million subscribers, New Yorkers alone would account for nearly 10 percent of merger company's total customer base.
So, New York represents a sizable chunk of potential revenue for the nation's largest cable provider. Comcast argues that allowing the merger to go through would bring faster Internet speeds, better video choices and a commitment to net neutrality.
"We believe there are significant benefits to New York customers for this deal, and there's no reduction in competition — consumers will have the same number of choices before the deal as after it," said Comcast spokeswoman Sena Fitzmaurice.
Consumer advocates, however, are pressuring the state public service commission to reject the deal. According to Tim Wu, the Columbia Law scholar who's running for New York lieutenant governor, an unfavorable ruling for Comcast from the PSC could force the company to reassess the merger and come at it with a different approach.
"I think it would do enough to change the merger that it would have to be scrapped and started from scratch," Wu said. He has promised that, if elected, he'll urge state regulators to take a more active role in overseeing telecom mergers.