Customer service incidents jeopardize Comcast merger
CHICAGO – Last week’s “Super Bitch” billing incident, the latest in a string of customer service horror stories for Comcast, could cost the cable giant a lot more than one unhappy subscriber.
The company’s proposed $45 billion merger with Time Warner Cable, which is facing increased scrutiny from federal regulators, may hang in the balance.
“The customer service nightmares of the past 12 months certainly aren’t going to help,” said Craig Moffett, a senior analyst at MoffettNathanson.
Mary Bauer, who lives in a Chicago suburb and received the insulting invoice after repeatedly complaining about her service, has been offered two years of free cable by the company. And the rogue customer service employee who bestowed upon Bauer the unflattering appellation has been identified and fired, Comcast said.
While Comcast’s situation with Bauer is ostensibly resolved, its merger with Time Warner Cable is stalled, and odds of its approval are decreasing, according to Moffett.
Comcast agreed to acquire Time Warner Cable a year ago in a stock transaction that would make the nation’s largest video and high-speed Internet provider even larger.
The deal, which must be approved by the Justice Department and the Federal Communications Commission, has stalled in recent months because of regulatory changes.
The combined company would control 30 percent of the cable market and about a third of all broadband connections. Comcast has agreed to divest of 3 million cable subscribers as part of the deal to keep its market share at the 30 percent threshold, formerly a statutory limit imposed by the FCC. While no longer mandated, the divestiture is seen as a goodwill gesture by Comcast, Moffett said.
While there is no limit for high-speed Internet market share, it could prove more problematic for Comcast in the current regulatory and political environment. “That increases Comcast’s apparent market share, making it easier for the Justice Department to block the transaction,” Moffett said. “But it is also emblematic of a relatively hostile environment in Washington for cable operators right now.”