First New York, now California: State regulators vow to examine Comcast-TWC merger

August 15

David Cohen, executive vice president of the Comcast Corporation, testifies during the Senate Judiciary Committee hearing on 'Examining the Comcast-Time Warner Cable Merger and the Impact on Consumers', on Capitol Hill in Washington DC, USA, 09 April 2014. EPA/MICHAEL REYNOLDS

Comcast's campaign to win over Washington regulators continues apace. On Wednesday, the company's executive vice president, David Cohen, met with the Federal Communications Commission to argue that a merger with Time Warner Cable should be judged on the merits, not determined based on how other industry players might react to a deal.

But even as the cable company lobbies at its hardest in the nation's capital, regulators in other parts of the country are signaling that they're going to take a hard look at the deal for themselves. The latest came Thursday when California's public utility commission published a memo laying out questions for Comcast as part of a separate merger review, bringing the number of states looking critically at the merger up to two.

"The ultimate test of a proposed change of control is whether or not it is in the public interest," California officials wrote.

To that end, the commission is requiring that Comcast explain how a merger with Time Warner Cable would benefit California voice and broadband customers, as well as to prove that the deal will improve Internet access among students and the poor. Findings from the California review will be submitted to the FCC ahead of the federal government's decision on the deal, officials said.

States have traditionally played a role in overseeing mergers that come under their regulatory jurisdiction, though scholars say many in recent years have left that responsibility to the federal government. Powerful and populous states like California and New York tend to be the exception.

Depending on a state's laws, utility commissions may be authorized to block mergers from taking effect locally even if the FCC decides to grant federal approval. And in the case of a big merger like this one, we could see a domino effect, said Tim Wu, a merger critic running for lieutenant governor of New York.

"Traditionally these commissions have just extracted goodies from the companies," said Wu. "But I think that if one commission turns on the deal, everyone else will follow."

Wu has pledged to pressure New York's public utility commission to block the deal.


(SNL Kagan)

Comcast said it welcomed the additional scrutiny.

"We look forward to working with the California Public Utilities Commission and its commissioners as they review the transaction," Comcast said in a statement. "We are confident the record will demonstrate the many public interest benefits the transaction will bring to residential and commercial customers across the State.”

New York has warned Comcast that it's skeptical of the deal. If the merger gets blocked there, Comcast stands to lose access to 2.5 million current Time Warner Cable subscribers.

Now the same may be occurring in California. If California prevents the merger from moving forward, it would affect a substantial number of cable subscribers. Time Warner Cable claims about 1.5 million customers in the state's southern regions — about 5 percent of the total subscribers Comcast is expected to control if the whole merger is approved.

"Nationally there's an interesting unfolding here of major Comcast-Time Warner Cable markets who are registering very serious questions about this merger," said Sunne Wright McPeak, president of the non-profit California Emerging Technology Fund and a former secretary of the state agency for business, transportation and housing. "The state of New York has said they see no public benefit, as they see it."

California officials anticipate making a decision on the merger by December.

Brian Fung covers technology for The Washington Post.
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