Comcast to California: we want it all

26 July 2014 by Steve Blum

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One of the (apparent) revelations in the arguments Comcast submitted to the FCC in support of its proposed take over of Time-Warner Cable and a market consolidation swap with Charter Communications is that it is not going to give up even a tiny piece of California. I guess we should feel flattered.

When the market swap was announced in April, the plan was for Comcast to add all of Time-Warner’s and all of Charter’s cable systems to its extensive California holdings, except for the Lake Tahoe area. Which made sense from a media perspective. Charter is strong in northern Nevada, and particularly in Reno, which is the center of the television market that includes Tahoe. That simplifies marketing, customer service, retransmission negotiations and a whole range of other day to day jobs.

But something trumped operational efficiency. Last month, Comcast sent a letter and supporting documents to the FCC trying to explain why the grand three-way bargain would be good public policy. (I missed it at the time, h/t to Jim Warner at UCSC for the pointer). Included in that filing was a map that gave more details on the markets Comcast and Charter would be swapping.

Not only is Comcast hanging on to the systems it already owns, it’s also hoovering up the Charter systems on the California side of the border. Northern Nevada, though, stays with Charter. Political, regulatory and jurisdictional issues outweighed economic and operational rationality, it appears.

The reason could be as mundane as tax considerations and bureaucratic paperwork, but the cost of nurturing sympathetic politicians in Sacramento is something that Comcast is already paying, and Charter would no doubt like to avoid. Along with an estimated 80% share – near-monopoly level – of the cable market in California, Comcast would also be in a position to buy undivided loyalty in our state capitol.