Wheeler Seen Not Having Decided on Comcast/TWC

FCC Chairman Tom Wheeler isn’t seen as having made a decision on Comcast’s proposed buy of Time Warner Cable, said analysts, cable industry and public interest officials in interviews this week. Ex-FCC Chief of Staff Blair Levin doesn’t believe a decision on the merger has yet been made, he said in a conference call. The Department of Justice will decide if the deal should be approved, he said. Wheeler “may know where he’s leaning” but it’s “inconceivable” he would decide the fate of the deal before the Sept. 23 due date for Comcast and TWC’s opposition filings, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman. The FCC is also awaiting responses from Comcast, Charter Communications and TWC to the Media Bureau’s detailed information requests related to the deal and to Charter’s buying divested systems (CD Aug 26 p1), which were due Thursday, Schwartzman said. “Even if he made a decision, he doesn’t necessarily have the three votes” needed for a majority vote on the FCC, Schwartzman said.

Though Wheeler’s speech on broadband competition last week (CD Sept 5 p1) has been seen as demonstrating that his view of the broadband market is at odds with Comcast’s, investors don’t see it as an omen of the deal’s failure, said MoffettNathanson analyst Craig Moffett. Comcast and TWC shares have traded up rather than down in the time since the speech, Moffett said. “There doesn’t seem to be undue concern.” If investors believed the deal were doomed, Comcast stock might not be affected, but TWC stock would likely be falling, he said. “The market is paying attention to every word the chairman says,” Moffett said. The FCC did not respond to a request for comment.

Wheeler’s speech was designed “to take back the narrative” from critics arguing that he is too close to the cable industry and companies opposed to net neutrality, Levin said. Investors perceived it as “saber rattling,” rather than a substantive threat to the deal, Moffett said. Rather than easing critical pressure on Wheeler, the speech increased the stakes for his eventual decisions on net neutrality and Comcast/TWC, Schwartzman said. “Now, he’s set a higher bar for approval."

Though industry observers discount the speech as a predictor of the “yes” or “no” ruling on Comcast/TWC, they said it might indicate the prospects for deal conditions. “There’s clearly a connection between the merger and net neutrality,” said Guggenheim Partners analyst Paul Gallant. The ability to impose conditions gives Wheeler and the other FCC Democrats a pathway to get concessions that might be more difficult to obtain in a net neutrality proceeding, Gallant said. The commission’s eventual net neutrality policy will be a presage of Comcast/TWC’s conditions, Levin said. If the FCC uses its Communications Act Section 706 authority for net neutrality, it’s likely to compensate by imposing more stringent conditions on the deal, Levin said. The reverse is also true, with net neutrality rules based on Title II reclassification likely indicating less-tough deal conditions, he said. “It makes political and analytical sense,” Levin said. “If you go with the lighter touch on net neutrality, you have to have tougher controls on the biggest competitors."

Trying to predict Wheeler’s decision this early in the Comcast/TWC proceeding is too difficult, said American Cable Association President Matt Polka. “It’s just people reading tea leaves.” Though Wheeler “has strong views,” he won’t have reached a conclusion on the matter this early in the game, Polka said. Despite Wheeler’s speech, there’s a still “a general sense” among FCC watchers that Comcast/TWC will get approved, Schwartzman said. “It’s just the conditions that are up in the air.”