Speaker 1: Get in with technology with tech Stuff from Stuff Tachom.
Speaker 1: Hey there, and welcome to tech Stuff. I'm Jonathan Strickland here,
Speaker 1: the moved host, and I am bringing to you part
Speaker 1: two of the Tromcast story. In part one, you heard
Speaker 1: about the founding of the company and the fledgling and
Speaker 1: cable industry. Why the cable industry was even a thing
Speaker 1: in the first place. It was originally just so people
Speaker 1: who could not receive over the air broadcast could still
Speaker 1: get some programming, especially as television became a more and
Speaker 1: more important means of communication in the dawn of the
Speaker 1: digital age, and actually the broadcast age, I should say
Speaker 1: precedes the digital age. But we talked about the founding
Speaker 1: and the rise of of Brian Roberts, the son of
Speaker 1: founder Ralph J. Roberts. I thought i'd pick up specifically
Speaker 1: right there. This is going back to nine teen ninety
Speaker 1: that's when Ralph J. Roberts named his son, Brian Roberts,
Speaker 1: the president of Comcast. Not at the time, Brian was
Speaker 1: just thirty years old, and the announcement caused a bit
Speaker 1: of a stir because here's this young guy taking over
Speaker 1: the role of president of a major cable company. That
Speaker 1: had been making some pretty pretty hefty moves in the industry. Now,
Speaker 1: Ralph J. Roberts said he would stay on as the
Speaker 1: chairman of the company. And while thirty is pretty darn
Speaker 1: young to be the president of a rapidly growing company,
Speaker 1: Brian had actually been working for Comcast in one way
Speaker 1: or another since before he was ten years old. According
Speaker 1: to some reports, he was seven when he started working,
Speaker 1: which mean they had twenty three years of experience working
Speaker 1: for Comcast. I do question exactly what he was doing
Speaker 1: at seven years old, but that's the story, at least
Speaker 1: in certain Comcast literature. But that would mean that he
Speaker 1: was actually one of the more senior employees of Comcast.
Speaker 1: He had worked there longer than a lot of other
Speaker 1: people there, so at least from the seniority standpoint, it
Speaker 1: wasn't that unusual, although some might argue that it was
Speaker 1: a little weird for a father to name his son
Speaker 1: the president of the company he founded. At any rate,
Speaker 1: Brian Roberts definitely dedicated himself to the success of the company,
Speaker 1: there was no question about that. Around that time, operations
Speaker 1: were continuing to grow in Britain. If you listen to
Speaker 1: the last episode, you know that one of the things
Speaker 1: Comcast looked at in the eighties was to expand in
Speaker 1: in the UK because it was starting to get really
Speaker 1: difficult to grow in the United States. They were starting
Speaker 1: to reach full penetration of cable service and the few
Speaker 1: cable companies that were left were really expensive and limited
Speaker 1: in their range, so they looked elsewhere. Well By had
Speaker 1: one million customers in the United Kingdom, and Comcast made
Speaker 1: additional purchases in the cell phone space as well here
Speaker 1: in the United States in order to grow its business
Speaker 1: as m CIL was not growing as quickly as the
Speaker 1: company had hoped. If you remember, am Cell was the
Speaker 1: cable the cell phone service company they purchased in an
Speaker 1: effort to get into a new field. But am Cell
Speaker 1: kind of suffering the same issues that the cable service
Speaker 1: industry was suffering, and that people weren't necessarily flocking to
Speaker 1: m Cell to become customers. So instead of trying to
Speaker 1: push that business out harder, Comcast looked at acquiring additional
Speaker 1: cell phone service companies to bolster its customer base. That way,
Speaker 1: so if growth isn't there, you should just go out
Speaker 1: and buy it, I guess. In the headquarters for a Comcast,
Speaker 1: which were located at one Meridian Plaza in Philadelphia, caught fire.
Speaker 1: The building was totally destroyed. The fire took nineteen hours
Speaker 1: to extinguish, so Comcast is actually the core headquarters was
Speaker 1: shut down for about eight days until they set up
Speaker 1: a temporary headquarters four blocks away from their original burnt
Speaker 1: out home. Also in Comcast held a bit of a
Speaker 1: marketing stunt. They completed a five way international phone call
Speaker 1: to demonstrate you don't need a telephone company to make
Speaker 1: a call, even a complicated one, and that really prompted
Speaker 1: telephone companies to argue that they should be allowed to
Speaker 1: enter the cable television business, since the cable television business
Speaker 1: was now dominating in the phone business, at least in
Speaker 1: cell phone coverage. Also in Comcast bought interest in Store Communications,
Speaker 1: the company that had previously sold as Florida Operations to
Speaker 1: several years earlier. You remember I mentioned that in the
Speaker 1: previous episode. And Comcast became the third largest cable operator
Speaker 1: in the United States after it acquired the US cable
Speaker 1: operations of McLean Hunter. The company also launched a new
Speaker 1: public company in the UK called Comcast UK Cable Partners,
Speaker 1: and Comcast made golfers extremely happy when they partnered with
Speaker 1: a few other companies and became a founding investor of
Speaker 1: the Golf Channel, which, as I recall, was one of
Speaker 1: the earliest channels to offer high definition programming. That was
Speaker 1: a little bit later, but thank goodness, you could watch
Speaker 1: golf and high definition. I find golf very relaxing to watch.
Speaker 1: I that's the best thing I can say about it.
Speaker 1: I guess I certainly takes skill to play, and I
Speaker 1: lack it at any rate. That year, Comcast also entered
Speaker 1: a partnership with Sprint UH Telecommunications Incorporated and Cox Communications,
Speaker 1: and together they formed the Sprint Telecommunications Venture, which was
Speaker 1: later called Sprint Spectrum LP and later still was called
Speaker 1: Sprint PCs. So once again Comcast can and used to
Speaker 1: try and diversify, expanding into cellular service and wireless service.
Speaker 1: Comcast itself would continue to grow mainly through acquisitions. As
Speaker 1: we've seen in our previous episode, the company would buy
Speaker 1: up other cable operators and mostly expand that way, eliminating
Speaker 1: competition along the way, which certainly helped and in Comcast
Speaker 1: had more than four point three million customers, mainly through
Speaker 1: this tactic of buying up existing companies and converting them
Speaker 1: into Comcast, so customers found themselves becoming Comcast customers. Just
Speaker 1: through these acquisitions, Comcast bought a sixty three percent share
Speaker 1: of the Philadelphia Flyers from a company called Spectacre, which
Speaker 1: was created by Flyers founder Ed Snyder. Comcast had created
Speaker 1: a new company with this partnership, and it's now called
Speaker 1: Comcast Spectacre. The company not only owns and manages the
Speaker 1: Flyers and also the Wells Fargo Center in Philadelphia, and
Speaker 1: the company has divisions overseeing the venue, ticketing and concessions.
Speaker 1: This is not the only sporting franchise that Comcast owns.
Speaker 1: There are others in the Philadelphia area as well, which
Speaker 1: makes sense. I mean, that's again where Comcast headquarters are.
Speaker 1: That's where a couple of the co founders of Comcast
Speaker 1: grew up, and uh, they are still very much heavily
Speaker 1: involved in the sports area of Philadelphia. Comcast also announced
Speaker 1: it would create a new channel in Philadelphia just called
Speaker 1: Comcast sports Net, specifically a regional sports channel for the
Speaker 1: Philadelphia area. And finally, in nine Comcast got into the
Speaker 1: broadband business. The company launched a service called Comcast at Home,
Speaker 1: with the at being the at symbol, and they launched
Speaker 1: it in Baltimore, Maryland and Sarasota, Florida, kind of as
Speaker 1: a sort of prototype. They're there ted sting grounds. They
Speaker 1: wanted to see if this business would have any legs,
Speaker 1: and the trial run offered a cable modem service to customers,
Speaker 1: and as it turned out, and ended up being a
Speaker 1: fruitful business which Comcast quickly began to adopt and roll
Speaker 1: out in other areas. In nineteen seven, another major company
Speaker 1: took interest in Comcast, and that major company is Microsoft.
Speaker 1: So Bill Gates's company invested one billion dollars in Comcast
Speaker 1: in nine The purpose of that investment was to help
Speaker 1: Comcast deploy high speed data and video services through its infrastructure.
Speaker 1: So Comcast was starting to look at ways of creating
Speaker 1: a fiber optic coaxial sort of system, replacing lots of
Speaker 1: copper lines with fiber optic lines to deliver much faster service.
Speaker 1: And it was through this investment that Comcast was able
Speaker 1: to afford that infrastructure without affecting its operating funds too much.
Speaker 1: And in this way, this was a step to move
Speaker 1: towards the world we live in now, in which people
Speaker 1: in the United States can get high speed Internet streaming
Speaker 1: to different devices in the home and not just PCs.
Speaker 1: In fact, in the press release that Microsoft VP of
Speaker 1: Corporate Development, Greg Maffei had taken part in, MAFE had said,
Speaker 1: like Comcast, Microsoft has always believed that increasing network bandwidth
Speaker 1: is a key to the eventual convergence of the Internet,
Speaker 1: the PC, and the television. So even back then, there
Speaker 1: was a look at we're using these pipes in the
Speaker 1: parlance of the web. We're using these pipes to deliver
Speaker 1: TV and to deliver broadband. Broadband, by the way, is
Speaker 1: being delivered over one of those six mega hurts channels
Speaker 1: that I talked about in the first episode that cable
Speaker 1: can you cable can hold hundreds of mega hurts, So
Speaker 1: broadband internet connection is just six mega hurts of a cable.
Speaker 1: That's plenty of base available for that. So Microsoft was saying,
Speaker 1: we've got this delivery system that's doing both television and Internet.
Speaker 1: It's only a matter of time before we start to
Speaker 1: see these different technologies start to converge into a single technology.
Speaker 1: And as it turns out, that's very much true. It
Speaker 1: took a little bit longer than what they were expecting,
Speaker 1: I imagine, but that's what we're seeing now. A lot
Speaker 1: of people either have smart televisions or they have their
Speaker 1: TVs hooked up to one or more set top devices
Speaker 1: that allows them to view Internet content on their televisions.
Speaker 1: And there are some who argue that eventually that will
Speaker 1: be the primary and perhaps only way that will get
Speaker 1: content on our TVs. That we won't receive programming from
Speaker 1: a cable service directly. It will be through an Internet service.
Speaker 1: And that's quite possible. Well, more and more people are
Speaker 1: opting for that, as we'll say later in the episode,
Speaker 1: and any rate, by this time, cable television wasn't even
Speaker 1: the largest division within Comcast. Cable TV was taking a
Speaker 1: back seat. Uh So, Comcast had interest in content and
Speaker 1: cellular services, and there were growing concerns that the company
Speaker 1: in charge of delivering content was also in the business
Speaker 1: of creating content, and those concerns would grow over the
Speaker 1: following years. This is where you started seeing people make
Speaker 1: noise about net neutrality. How can a delivery system remain
Speaker 1: unbiased when it also was creating content being delivered on
Speaker 1: that system. In other words, if you are a company
Speaker 1: that creates content and you're also a company that allows
Speaker 1: content to be delivered to customers. How can anyone be
Speaker 1: certain that you don't give your own content preferential treatment.
Speaker 1: Maybe you slow down other types of content across your network,
Speaker 1: maybe you don't allow it to even broadcast on your network.
Speaker 1: Maybe you tell your customers, hey, the stuff we have
Speaker 1: is the best stuff out there. You don't need anything else.
Speaker 1: These were big concerns, and while Comcast was largely playing nice, uh,
Speaker 1: it was a it was a worry that perhaps in
Speaker 1: the future that would not be the case. And so
Speaker 1: we really started getting into the conversations about net neutrality
Speaker 1: around this time. I mean they had been around before that,
Speaker 1: but this is when it really started to take more
Speaker 1: of a spotlight, and that would increase over the years.
Speaker 1: Skipping ahead to two thousand one, Comcast bought the Outdoor
Speaker 1: Life Network and expanded its investment in the Golf Channel,
Speaker 1: which ended up giving Comcast controlling interest in that network,
Speaker 1: and it also announced it would purchase a T and
Speaker 1: T broadband for a cool seventy two billion dollars. At
Speaker 1: that time, a T and T broadband was the largest
Speaker 1: cable TV provider in the United States, so Comcast both
Speaker 1: eliminate some competition and grows its own cable television services
Speaker 1: by buying another service, uh, which no big surprise again
Speaker 1: if you're looking back along the history of Comcast, that
Speaker 1: was the tactic from day one. Really. In two thousand two,
Speaker 1: Comcast unveiled plans for HD television and video on demand services. Again,
Speaker 1: the Golf Channel was one of those early HD channels.
Speaker 1: As I recall, this was one of those things where
Speaker 1: the United States was definitely trailing behind Japan by several years.
Speaker 1: But HD television's back in the early two thousand's were
Speaker 1: really expensive. I don't know if you guys remember, because
Speaker 1: these days, you know, you can go out and buy
Speaker 1: an HD television for a relatively low cost, still several
Speaker 1: hundred dollars. But you know, when you start looking at
Speaker 1: things like four K televisions, they are relatively inexpensive. HD ones,
Speaker 1: that is, HD are relatively inexpensive compared to four K.
Speaker 1: But just like four K. Now, back then, there were
Speaker 1: very few channels that actually offered up h D content.
Speaker 1: So you can get an HD television, but there wasn't
Speaker 1: much to watch on it at the time. The Golf
Speaker 1: Channel was one of those things, so if you really
Speaker 1: like golf, you could get a really good, look at it. Uh. Also,
Speaker 1: Brian Roberts assumed the role of CEO of the company,
Speaker 1: becoming president and CEO in two thousand two. Not long
Speaker 1: after that, he would actually also assume the role of chairman,
Speaker 1: so became President, CEO and chairman of Comcast. Again, keep
Speaker 1: in mind this is the son of the founder, Ralph J. Roberts.
Speaker 1: In two thousand four, Comcast made an unsuccessful bid for
Speaker 1: a hostile takeover for the Walt Disney Company. Now that
Speaker 1: might sound pretty weird, because today Disney is bigger than ever.
Speaker 1: Disney owns so much. Disney bought Marvel, Disney bought the
Speaker 1: Star Wars franchise. The movie is are doing really well.
Speaker 1: But in the early two thousand's Disney was in turmoil.
Speaker 1: There were leadership issues. People were disenchanted with Michael Eisner
Speaker 1: as the chairman of Walt Disney. The company itself was
Speaker 1: not doing as well in the market as it had
Speaker 1: been previously. Some people were beginning to feel that Disney
Speaker 1: itself had the company had lost its way, and people
Speaker 1: like Roy Disney, who had been on the board of directors,
Speaker 1: seemed to be in dismay at the state of the company.
Speaker 1: So the bid was somewhere in the fifty four billion
Speaker 1: dollar range, and it was based on stock price. It
Speaker 1: was going to be a stock exchange deal if this
Speaker 1: were to actually go through. But it was a hostile
Speaker 1: takeover and does that mean well. Originally, Comcast was sending
Speaker 1: messages to Disney chairman Michael Eisner, but Eisner refused to
Speaker 1: discuss a deal. Then Comcast went over Eisner's head and
Speaker 1: sent a letter of intent to directly to the board
Speaker 1: of directors, saying, we want to purchase your company. Here
Speaker 1: are the here's the deal where we want to do
Speaker 1: it in stock. The stock is currently valued at fifty
Speaker 1: four billion dollars. Now Disney itself was being valued somewhere
Speaker 1: in the sixty six billion dollar range, but again it
Speaker 1: was kind of struggling at the time. So comcast hope
Speaker 1: was that the board of directors would come and talk
Speaker 1: to Comcast and they would be able to work this
Speaker 1: out and that uh, you know, maybe the word board
Speaker 1: of directors thought this would be the best approach in
Speaker 1: order to make money for shareholders, for Disney shareholders, and
Speaker 1: the attempt was huge news because the number of properties
Speaker 1: that would have been involved were significant. Disney at that
Speaker 1: Time was already the parent company of ESPN and ABC,
Speaker 1: so those would fall under the role of Comcast. Then
Speaker 1: Comcast the delivery system would also be in control of
Speaker 1: ABC and ESPN, and people were worried that this would
Speaker 1: mean Comcast would be able to leverage that over other providers.
Speaker 1: So let's say Time Warner Cable and it comes up
Speaker 1: and Comcast says, hey, I own ESPN, And if you
Speaker 1: want ESPN to run on your cable networks to your
Speaker 1: cable customers, you're gonna have to pay X amount to
Speaker 1: have access to that content. Uh. You know, it would
Speaker 1: have been a very powerful leveraging tool, but there was
Speaker 1: no need to worry about that. The deal actually fell
Speaker 1: through when shareholders for both Disney and Comcast were resisting
Speaker 1: the move for different reasons. Comcasts stock price fell eleven
Speaker 1: percent over the time from when they announced the bid
Speaker 1: to the time when they decided to walk away. Now,
Speaker 1: because the stock price fell eleven percent, and because their
Speaker 1: bid was about an exchange of stock, the value of
Speaker 1: the stock they were bidding fell, I mean, it wasn't
Speaker 1: as valuable as it used to be. This would be
Speaker 1: as if I went up to you and said, hey,
Speaker 1: I want to buy your shoes for ten bucks, and
Speaker 1: you say, well, I'll think about it, and the next
Speaker 1: day I come up to you with a ten dollar bill.
Speaker 1: But in that time, the value of ten dollars has decreased,
Speaker 1: meaning the buying power of that ten dollars is less.
Speaker 1: It's similar, except now we're talking about actual stock, not
Speaker 1: the value of currency. But the point being that what
Speaker 1: used to be worth fifty four billion dollars was now
Speaker 1: worth even less than that, so that made it a
Speaker 1: much less attractive deal for the Disney board of directors. Meanwhile,
Speaker 1: the board of the Board of Directors are also getting
Speaker 1: the message from their shareholders, we don't want you to
Speaker 1: sell this company to Comcast. And since both parties were
Speaker 1: receiving this kind of resistance, Comcast announced it would drop
Speaker 1: the bid just a few months after it had first
Speaker 1: announced its intention, and uh and Roberts had said he
Speaker 1: was very disappointed in the Disney Board of Directors for
Speaker 1: not coming in and communicating with him. He thought that
Speaker 1: it was the best deal for both companies. Meanwhile, the
Speaker 1: Board of Directors didn't UH didn't really dignify that particular
Speaker 1: aunt h statement with a response. Also in two thousand four,
Speaker 1: Comcast purchased a little company called tech TV, and who boy,
Speaker 1: is this a heck of a story. So Comcast carried
Speaker 1: a company a channel called G four which catered to
Speaker 1: video game fans. It was mostly content related to video
Speaker 1: games in some way, including things like review shows, shows
Speaker 1: that just did clips of video games, uh, game shows
Speaker 1: that were video game related, lots of stuff like that.
Speaker 1: Tech TV, on the other hand, was a more general
Speaker 1: technology based channel where they had everything from product reviews
Speaker 1: to h question and answer like people could call in
Speaker 1: and ask experts how to do certain things with their computers,
Speaker 1: like how to install motherboards, that kind of stuff like
Speaker 1: actual technical help um as well as shows that were
Speaker 1: things like like they had their own video game review shows.
Speaker 1: So there were there were competing shows on the two channels.
Speaker 1: So Comcast purchases tech TV in two thousand four and
Speaker 1: then merges it with G four, creating the G four
Speaker 1: tech TV channel, and then kind of letting the two
Speaker 1: slates of of programming battle it out to see which
Speaker 1: ones would remain and which ones they would get rid of.
Speaker 1: And I've got a lot of friends who worked either
Speaker 1: for G four or tech TV, and I hope to
Speaker 1: do an episode in the future. I've already recorded some
Speaker 1: interviews about this. Actually, I hope to do an episode
Speaker 1: in the future about tech TV and G four and
Speaker 1: the merging of the two, and to include interview segments
Speaker 1: that I have gathered over time. So that's something I
Speaker 1: want to do in the future, and it will definitely
Speaker 1: be a long episode, probably a multi partner because it
Speaker 1: was so complicated. It was a venture that people when
Speaker 1: when these channels first started, they were really excited about
Speaker 1: them because this was Uh, these were industries that were
Speaker 1: all getting more and more important over time. People were
Speaker 1: getting more interested in technology and computers and video games.
Speaker 1: But when you get these big corporations like Comcast involved,
Speaker 1: sometimes the ideas that people had when they first founded
Speaker 1: the channel end up getting changed or lost or or discarded,
Speaker 1: and uh, it creates a very emotional kind of story.
Speaker 1: So keep in tune with tech stuff. Let me know
Speaker 1: if that sounds interesting to you, because I do hope
Speaker 1: to do it in the future. I still have to
Speaker 1: do several more interviews in order to get kind of
Speaker 1: a full story of it moving on with Comcast. By
Speaker 1: the way, G four tech TV doesn't exist anymore. In
Speaker 1: case you were wondering if if you weren't aware, G
Speaker 1: four tech TV eventually went away and I believe became
Speaker 1: the Spike Network. If I'm not mistaken, or it's no,
Speaker 1: it's Esquire, I'm sorry, it's the Square Network. I believe
Speaker 1: um Esquire would eventually take over for G four tech TV,
Speaker 1: and so that channel no longer exists, and uh, a
Speaker 1: lot of good people worked for that channel over time. Anyway,
Speaker 1: two thousand five, Comcast joins a group of investors, which
Speaker 1: included Sony Corporation of America, to purchase a twenty steak
Speaker 1: in Metro Goldwyn Meyer better known as MGM Studios, so
Speaker 1: the entertainment studios that produced lots of movies, including the
Speaker 1: James Bond franchise. It turned out to be a pretty
Speaker 1: tough investment, so five years later, in two thousand ten,
Speaker 1: MGM would file for Chapter eleven bankruptcy and they would
Speaker 1: emerge from bankruptcy after a little more than a month
Speaker 1: after entering bankruptcy with the creditors MGMs creditors taking control
Speaker 1: of the company. So that was a pretty rough time.
Speaker 1: I mean, it was an investment, it was a gamble,
Speaker 1: and unfortunately for the investors, the market for DVDs was
Speaker 1: really falling out by that point, and that ended up
Speaker 1: taking a big hit. MGM took a big hit from that.
Speaker 1: That same year two five, that is, Comcast unveiled at
Speaker 1: digital phone service and plans to purchase internet businesses, further
Speaker 1: getting involved in both the delivery and production of cable
Speaker 1: content both on TV and on the Internet. So if
Speaker 1: you have ever looked at Comcast ex Affinity, which is
Speaker 1: the brand for their digital service to homes, you often
Speaker 1: will see that it can be bundled where you get
Speaker 1: phone service, cable television, and internet broadband all bundled together. That's,
Speaker 1: you know it calculated approach that Comcasts made back in
Speaker 1: this time. In two thousand and seven, that's when Comcast
Speaker 1: actually acquired Fandango, the movie ticket service, the one that
Speaker 1: kind of precipitated this whole discussion about Comcast in the
Speaker 1: first place, because if you recall from episode one of
Speaker 1: this series, I mentioned that I started looking into this
Speaker 1: after I had problems buying Star Wars tickets because the
Speaker 1: Fandango service had been overwhelmed by demand and it pretty
Speaker 1: much collapsed. By the way, in case you were worried,
Speaker 1: I did eventually get Star Wars tickets for opening night.
Speaker 1: I just had to wait till the next morning. It's
Speaker 1: just I am not a good Jedi. I don't have patience.
Speaker 1: So it was a tough, tough twenty four hours or
Speaker 1: so at any rate. Comcast purchased Fandango back in two
Speaker 1: thousand and seven, and uh, Fandango is one of those
Speaker 1: services that I personally find a little frustrating. I much
Speaker 1: prefer when movie theaters have their own, uh theater specific
Speaker 1: services to to sell tickets to customers, because you don't
Speaker 1: have to worry if there's a huge amount of demand
Speaker 1: for the overall film, typically speaking, because it's distributed amongst
Speaker 1: all those theaters. It's when you have a centralized service
Speaker 1: where all that demand is going to a single collection
Speaker 1: of servers where you start running into these problems. And
Speaker 1: granted the Star Wars issue was a special case, it's
Speaker 1: not like that's going to happen with every movie. For example,
Speaker 1: Jim and the Holograms. Don't think that one's going to
Speaker 1: collapse the system, even though it's truly outrageous, truly truly
Speaker 1: truly outrageous. So two thousand seven Fendango acquisition happens, um
Speaker 1: I could go on about the case will service companies
Speaker 1: that Comcast acquired over the next few years, but by
Speaker 1: now you guys are all familiar with that story. It's
Speaker 1: the same story over and over. It's just the names
Speaker 1: and the prices change from case to case. In an
Speaker 1: effort to grow the company and increase the number of customers,
Speaker 1: Comcast kept acquiring other businesses, including ones like Patriot Media,
Speaker 1: Susquehanna Communications, and others. UH, and Comcast and Time Warner
Speaker 1: together would split up the assets of another company called
Speaker 1: Adelphia Communications. Adelphia had gone bankrupt and so as part
Speaker 1: of the UH, in order to settle the debt that
Speaker 1: Adelphia had acquired, they started selling off assets, and Comcast
Speaker 1: and Time Warner we're both allowed to buy up some
Speaker 1: of those, which not great news necessarily if you want
Speaker 1: more competition UH. Since these were the two big players
Speaker 1: in the United States at that same time, Comcast continued
Speaker 1: to launch channels fear Net and Exercise TV, and so
Speaker 1: they were controlling the distribution and content in an effort
Speaker 1: to set itself apart from competing cable and satellite services. Also,
Speaker 1: the Walt Disney Company, while it was not open to
Speaker 1: a hostile takeover bid, it did sell off its thirty
Speaker 1: nine share in the E Networks to Comcast, so Comcast
Speaker 1: was able to pick up a significant share in those
Speaker 1: those uh, those companies, those those networks, they didn't have
Speaker 1: controlling interest. But is nothing this sneeze at now. That
Speaker 1: doesn't even cover the continued interest in wireless broadband. Comcast
Speaker 1: was one of the companies that invested in clear Wire Corporation,
Speaker 1: for example, so Comcast was still very much interested in
Speaker 1: expanding in that industry as well. And the next really big,
Speaker 1: big piece of news dates to two thousand nine, and
Speaker 1: that's when it was announced that g E had agreed
Speaker 1: to sell controlling eight in NBC Universal to Comcast. Now,
Speaker 1: the approval for this deal would take quite some time.
Speaker 1: Congress scrutinized this deal and it wasn't until two thousand
Speaker 1: eleven that Congress approved the deal, and the acquisition itself
Speaker 1: wouldn't be complete until two thousand thirteen. So from two
Speaker 1: thousand nine to two thousand thirteen this deal was taking place.
Speaker 1: That's how big a deal we're talking about here. And
Speaker 1: the approval from Congress was actually conditional. It wasn't yeah,
Speaker 1: go ahead and you can buy them. And they actually
Speaker 1: had some some specific conditions that the companies had to
Speaker 1: adhere to. Comcast had to make assurances that it wouldn't
Speaker 1: prevent NBC programming from airing on competing broadcast services. They
Speaker 1: couldn't just say, well, now anything that's on NBC can
Speaker 1: only air on Comcast, or it can air on other stations,
Speaker 1: but only if you pay an outrageous premium for the broadcast.
Speaker 1: That was part of the agreement that Comcast would not
Speaker 1: make those kind of moves. Um. It also sparked another
Speaker 1: round of discussions about net neutrality, making certain delivery services
Speaker 1: aren't so wrapped up in programming that they began to
Speaker 1: tinker with accessibility. And uh, this is still a big
Speaker 1: deal today. I mean, this is a giant thing about
Speaker 1: about these distribution companies getting involved in content on this level,
Speaker 1: and as they own more and more of it, there's
Speaker 1: a greater concern that they will cause real issues for
Speaker 1: customers that hurts the customer in the long run. It's
Speaker 1: a great business decision, you know, from the business side,
Speaker 1: you can't argue it because it's gonna make tons of
Speaker 1: money for shareholders, But as a customer, as the person
Speaker 1: who comes home and wants to watch television, it's a
Speaker 1: negative experience, or it can be. It can certainly lead
Speaker 1: to one. So that's why these conditions were built in
Speaker 1: to the agreement. And then in two thousand and fourteen,
Speaker 1: skipping ahead to that, Comcast made a move to acquire
Speaker 1: its competitor, Time Warner Cable and this is when the
Speaker 1: Internet totally lost its mind. For very good reason. This action,
Speaker 1: more than any other, brought that net neutrality argument into
Speaker 1: the spotlight. Comcast was essentially saying that they wanted to
Speaker 1: buy its chief competitor, which would drastically reduce options for
Speaker 1: customers in numerous markets, which Comcast actually argued was a
Speaker 1: benefit to the customer if you can believe it. Now,
Speaker 1: keep in mind again, and most markets, customers don't have
Speaker 1: that much choice. They might have a choice of one
Speaker 1: cable provider and maybe one or two satellite providers, which
Speaker 1: is getting fewer and fewer anyway because of other acquisitions
Speaker 1: and consolidations. But that's it. They don't necessarily, you know,
Speaker 1: it's it's it's rare when you're in an area where
Speaker 1: you're like, well, I can get either Time Warner or
Speaker 1: I can get Comcast. It may be that you have
Speaker 1: either Comcast or a mobile wireless provider or satellite, and
Speaker 1: that's it. You don't have options between cable companies, in
Speaker 1: other words, and that is problematic. And Comcast was arguing
Speaker 1: that by buying Time Warner it would actually be an
Speaker 1: improvement to customers by streamlining everything. But when asked about it,
Speaker 1: when when people said, well, does this mean that, since
Speaker 1: there be no competition, you could lower the customer bill,
Speaker 1: they said no, not necessarily, so, in other words, customers
Speaker 1: would not see any benefit from this. The the benefits
Speaker 1: of competition are that companies will start to offer better
Speaker 1: prices and better options for customers in an effort to
Speaker 1: win more customers. But when you don't have competition, there's
Speaker 1: no reason to do that. In fact, you want to
Speaker 1: have higher prices because you can't go anywhere else for
Speaker 1: those services. That's the reason why monopolies are frowned upon
Speaker 1: and and normally either prevented or broken up. Although, as
Speaker 1: we talked about in our A T and T podcast,
Speaker 1: even the efforts to break up monopolies don't last forever.
Speaker 1: Often these companies will coalesce back together kind of like
Speaker 1: kind of like a planet getting broken up into space,
Speaker 1: and then the gravity's crushes all the pieces back together,
Speaker 1: so you have a planet again. It's almost the same thing. Uh. Anyway,
Speaker 1: I don't want to get off on a total rant there,
Speaker 1: but if you listen to episodes about A T and
Speaker 1: T about net neutrality, those sort of discussions go into
Speaker 1: greater detail about this sort of stuff. Anyway. Uh, there
Speaker 1: are only a few markets that really allow you to
Speaker 1: have some choice in the United States, and that's a
Speaker 1: real problem. And people opposed to the Time Warner deal
Speaker 1: argued that if it went through, there'd be a true
Speaker 1: monopoly in cable service in the United States. It would
Speaker 1: belong to Comcast. Now, there were also numerous examples of
Speaker 1: regions that were passing laws restricting public broadband initiatives. In
Speaker 1: other words, lobbyists for the cable industry we're working with
Speaker 1: politicians to make it difficult or even illegal for a
Speaker 1: government to offer broadband service as a utility. And there
Speaker 1: are certain areas in the United States where this was
Speaker 1: a big deal, specifically in places like Chattanooga. If Joe
Speaker 1: McCormick was in here, he's from Chattanooga, he could tell
Speaker 1: you about the crazy fast Internet service that people in
Speaker 1: Chattanooga can get through municipal WiFi, and cable companies really
Speaker 1: battle against that. They say it's unfair, which blows my mind,
Speaker 1: but that would be an entirely different episode for me
Speaker 1: to go into all of those details. At any rate,
Speaker 1: municipal broadband service became a battleground which continues to this day.
Speaker 1: The Federal Communications Commission has ruled that states are allowed
Speaker 1: to offer up broadband services, but cable interests are still
Speaker 1: fighting that decision and appealing it and arguing that the
Speaker 1: FCC doesn't really have the authority to make that statement
Speaker 1: in the first place, just as they resist other competitors
Speaker 1: like Google Fiber entering their turf. So what cable companies
Speaker 1: have done is they've divided up the United States into
Speaker 1: into neighborhoods that they can effectively control because they're the
Speaker 1: only party in town, and then they do their best
Speaker 1: to keep everybody else out. And again, this makes perfect
Speaker 1: sense from a business perspective. You don't want competition to
Speaker 1: come in and shake things up. But for customers it's
Speaker 1: not such a great story. So it gets pretty ugly
Speaker 1: and a lot of people, especially on my side of this,
Speaker 1: have a lot of harsh things to say, and I
Speaker 1: will again, try to avoid editorializing anymore than I already have. Uh,
Speaker 1: and it's it's entirely possible that I have blinders on here.
Speaker 1: It's not like I think that the other companies are
Speaker 1: necessarily altruistic, but I always like to see more competition
Speaker 1: rather than less. Anyway, back to Time Warner, That's what
Speaker 1: started this whole digression in the first place was the
Speaker 1: proposal for Comcast to acquire Time Warner. The deal would
Speaker 1: involve around forty five billion dollars in stock, and Congress
Speaker 1: began to scrutinize the deal and a lot of advocacy
Speaker 1: groups were calling for the deal to just be outright rejected.
Speaker 1: Comcast agreed to divest itself of nearly four million subscribers,
Speaker 1: essentially handing them over to Charter Communications, and this was
Speaker 1: supposed to be a sign of good faith, saying Comcast
Speaker 1: had no plan on taking over the entire industry. Charter
Speaker 1: Communications would still be there and they had three point
Speaker 1: nine million more subscribers than they had before because Comcast
Speaker 1: was giving them up. So see, there's competition. There's still
Speaker 1: Charter Communications. It's not like by buying Time Warner all
Speaker 1: cable would be Comcast for now, never mind the fact
Speaker 1: that once again there's not true competition in most markets anyway,
Speaker 1: While the deal was being considered, a T and T
Speaker 1: also announced its plans to acquire Direct TV for forty
Speaker 1: nine billion dollars, which added fuel to the fire of
Speaker 1: people worried about net neutrality and about media consolidation. There
Speaker 1: were tons of people now looking at these two major
Speaker 1: deals saying, we really need to think about this because
Speaker 1: if we go down this pathway, customers could be really
Speaker 1: hurt by the lack of choice Further down the road.
Speaker 1: In April two fifteen, Comcast and Time Warner announced that
Speaker 1: they were dropping the deal after numerous challenges and delays
Speaker 1: were brought up against it, and it was also rumored
Speaker 1: that the Department of Justice in the United States was
Speaker 1: leaning towards denying the deal in the first place, so
Speaker 1: walking away might have also been an attempt to make
Speaker 1: it seem as though the two companies had arrived at
Speaker 1: this decision themselves, rather than it being forced upon them
Speaker 1: by another party. The ongoing and just for Comcast today
Speaker 1: include the FCC wanting to reclassify broad band as a
Speaker 1: title to utility, which Comcast and other cable companies are challenging.
Speaker 1: And also this is really troubling for cable companies, especially
Speaker 1: well specifically cable TV companies. There's a flagging interest in
Speaker 1: cable television. This is not a big surprise for most
Speaker 1: of my listeners. I'm sure I bet there are a
Speaker 1: lot of you out there who are cable chord cutters.
Speaker 1: You know, you've you've cut the chord for cable TV,
Speaker 1: and you get your entertainment through the Internet, but not
Speaker 1: through television. You might feed the Internet to your TV,
Speaker 1: but you're not getting it through cable TV. I'm sure
Speaker 1: there are a lot of you out there who are
Speaker 1: doing that right now. And I bet there's some of
Speaker 1: you out there who are fall into the category that
Speaker 1: is now being called cord never's. Cord never's are people
Speaker 1: who have never subscribed to cable television. So we're talking
Speaker 1: about young adults who have never taken it upon themselves
Speaker 1: to get cable TV. They're not interested. It's not how
Speaker 1: they consume entertainment. They get everything they want through the
Speaker 1: Internet or through over the air broadcast, but they've never
Speaker 1: seen the value of subscribing to a cable television service.
Speaker 1: We're seeing both of those populations grow over time. Now
Speaker 1: that means that cable television providers are experiencing a crunch.
Speaker 1: They're losing customers who are cutting the cord, and they're
Speaker 1: not gaining new customers fast enough because more and more
Speaker 1: people are choosing not to ever subscribe to cable TV
Speaker 1: in the first place. So you're getting a narrowing band
Speaker 1: of customers for cable television, which is really created an
Speaker 1: error of desperation in that industry. And it means that
Speaker 1: you're getting some some pretty hard moves in that that industry,
Speaker 1: And it could ultimately mean that in the future, our
Speaker 1: television content will primarily come through the Internet, and cable
Speaker 1: TV as a thing will no longer exist. The industry
Speaker 1: itself will cease, and we'll have a totally different model
Speaker 1: for delivering television and creating television. That's a possibility, it's
Speaker 1: still going to take some time for that to happen.
Speaker 1: I mean, it's not like cable tv is in so
Speaker 1: much trouble that it could crumble at any second. It's
Speaker 1: still a huge, multibillion dollar industry. It's just a multibillion
Speaker 1: dollar industry that already is seeing loss of customers on
Speaker 1: either side of it people leaving and new people not
Speaker 1: coming in, so it'll be really interesting to see where
Speaker 1: that goes over the next I'd say decade decade um.
Speaker 1: I think we're gonna see more and more people turn
Speaker 1: to the Internet. We're gonna see more services like Netflix, Hulu,
Speaker 1: Amazon offering up their own original content that you can
Speaker 1: only get through those services. I know that Disney is
Speaker 1: looking at the possibility of launching its own streaming services
Speaker 1: as well, So it may be that in the future,
Speaker 1: instead of subscribing to a cable company and then picking
Speaker 1: a package that gives you certain channels, you may have
Speaker 1: to pick between different streaming video services. In fact, you
Speaker 1: already do for certain things, like you might not be
Speaker 1: an Amazon Prime member, which means you don't get certain
Speaker 1: Amazon shows, or you might not be a Netflix subscriber,
Speaker 1: which means you don't get certain Netflix shows or Hulu.
Speaker 1: All of these have original content and in order to
Speaker 1: access it, you have to subscribe to the to the services,
Speaker 1: generally speaking, So maybe in the future we have more
Speaker 1: and more of those, which puts the burden still on
Speaker 1: the customer. You have to decide what you're willing to
Speaker 1: pay for and what you don't you feel is not
Speaker 1: worth the money. You just you just don't see it,
Speaker 1: but it's bad news for cable TV providers. Comcasts, however,
Speaker 1: of course, is in the position where it's not a
Speaker 1: cable TV provider, it's a content provider and its Internet
Speaker 1: broadband provider, so it has some other businesses that it
Speaker 1: wants to protect, and it may be that in the
Speaker 1: next few years we see Comcast double down on Internet
Speaker 1: content and broadband delivery. We'll probably also see Comcast continue
Speaker 1: to fight competition in those spaces, specifically things like the
Speaker 1: entrance of Google Fiber into different regions. So that's what
Speaker 1: I think we're going to see in the future for Comcast.
Speaker 1: It's gonna be more of a focus on broadband UM
Speaker 1: and and Internet content, and we'll price see some pretty
Speaker 1: tough battles for municipal WiFi, for municipal broadband, for um
Speaker 1: stuff like Google Fiber to be allowed to come into
Speaker 1: neighborhoods and personally encouraged by the direction I've seen over
Speaker 1: the last year or two where it looks like the
Speaker 1: general consensus is that competition is a good thing. I
Speaker 1: don't even hate Comcast specifically, I I I have very
Speaker 1: strong opinions because of my own personal experience with this company.
Speaker 1: But that's my own personal experience and it's not a
Speaker 1: universal experience, and I would never suggest that my experience
Speaker 1: is the same that everyone else has had. But I
Speaker 1: love to see competition because it means that customers have choice,
Speaker 1: and I would much prefer to have choice than to
Speaker 1: be forced into using a specific provider because there is
Speaker 1: no other option, because that means that I can't weigh
Speaker 1: my options and make a decision. I have no deciding power.
Speaker 1: Um By creating that sort of competition, I can make
Speaker 1: those decisions. And maybe I stay with Comcast. Maybe I
Speaker 1: decided that's the best way for UH for me to
Speaker 1: get the access I need, or maybe I switched to
Speaker 1: a competitor like Google Fiber, which is rolling out service
Speaker 1: in Atlanta as I record this UM, and it will
Speaker 1: probably take another couple of years before that's complete. But
Speaker 1: the fact is that I think the more choice you have,
Speaker 1: the better better off you are as a consumer. Up
Speaker 1: to a point. Obviously, if you have five hundred choices,
Speaker 1: then you have another problem ahead of you, which is
Speaker 1: how do you decide among five hundred candidates which one
Speaker 1: is the best. But for something like cable where you
Speaker 1: may have one or two options, it makes it a
Speaker 1: lot easier, especially if you have to. I mean, if
Speaker 1: you have one, there's no decision to make, but you
Speaker 1: have to, you can at least weigh them against each
Speaker 1: other and make an informed decision that way. And I
Speaker 1: personally am looking forward to a world where we do
Speaker 1: have that kind of choice and aren't forced into it.
Speaker 1: But I'm curious what you guys think. Do you guys?
Speaker 1: First of all, do you live in a place where
Speaker 1: you have lots of options? Because there are a few.
Speaker 1: There are some regions that do have options when it
Speaker 1: comes to cable providers. I just don't happen to live
Speaker 1: in one of them. Or are you frustrated by this?
Speaker 1: Is this something that you feel has gone unaddressed too long,
Speaker 1: or is it totally cool? I'm curious to hear what
Speaker 1: your thoughts are. Right to me let me know. And
Speaker 1: also if you have suggestions for future topics of future episodes,
Speaker 1: or maybe someone I should interview or someone I should
Speaker 1: have on as a guest host, right to me let
Speaker 1: me know your thoughts. The email address is text stuff
Speaker 1: at how stuff works dot com, or you can drop
Speaker 1: me a line on Facebook, Twitter, or Tumbler. At all.
Speaker 1: Three of those use the handle text stuff h SW.
Speaker 1: That message will get to me, and I'll talk to
Speaker 1: you again. Really. See for more on this and thousands
Speaker 1: of other topics because it has stuff works dot com