An Ignoble Experiment

2. Buffett's Berkshire Hathaway shuffles pay TV support, buys into Charter, cuts back on DirecTV

Comcast (NASDAQ: CMCSA) wants to keep everything out of the shadows, so it's pulling its reported $110,000 support for a function honoring FCC Commissioner Mignon Clyburn while she and the agency are in the process of reviewing Comcast's $45.2 billion takeover of Time Warner Cable (NYSE: TWC).

The nation's top MSO and Time Warner Cable had originally pledged to spend $132,000 combined towards a dinner hosted by the Walter Kaitz Foundation honoring Mignon. The Kaitz Foundation's annual affair highlights greater diversity in the cable industry and Mignon will receive the "diversity award" for her accomplishment as the first African-American female to have been FCC chair.

The contributions immediately created a hailstorm of criticism highlighted by Techdirt which opined: "Diversity is a good thing and we're all for it. It's also great that Comcast and TWC want to 'support' diversity. But the questionable optics here are quite troubling--even if it's technically legal" and Citizens for Responsibility and Ethics (CREW) which said the pair's action "doesn't look so good."

In a letter to foundation executive director, Comcast Foundation president Charisse Lillie said her company was pulling its funding because it did not want either Clyburn or the foundation to "fall under a shadow as a result of our support for diversity in the cable industry," a story in Multichannel News said.

Comcast had first defended its position, with spokeswoman Sena Fitzmaurice fuming that the company "absolutely dispute(s) the notion that our contributions have anything to do with currying favor with Commissioner Clyburn or any honoree. Such claims are insulting and not supported by any evidence. They are purely fiction. We have supported the organization year in and year out regardless of who the dinner honorees have been," a story in Latest.com reported.

In addition to pulling the contribution, Lillie said, "We also request that there be no recognition of Comcast at the dinner."

Comcast has redirected the $100,000 into an "unrestricted contribution to Kaitz Foundation" so that the foundation "can continue its important work," Lillie said in the letter.

CREW, among the first to point out the contributions, issued a statement stating it was "glad Comcast recognizes donating more than $100,000 to honor a regulator with authority over their pending merger … raises serious questions."

Initially TWC issued a statement saying it was "pleased to continue our support this year as we do every year at the annual Kaitz Dinner," according to Multichannel News.

That support, while not suspended, was later redirected via a phone call, a Time Warner Cable spokesman told Politico, noting in a statement that "it's unfortunate that our long-standing sponsorship of this fundraising event dedicated to advancing diversity in cable has been mischaracterized by a few. We are re-directing our giving from the Kaitz dinner to the Foundation's unrestricted funds to support their programs. TWC will not be recognized as a sponsor."

For more:
- Multichannel News has this story
- The Washington Post has this story
- Politico has this story
- The Verge has this story

Read more about: Mignon Clyburn, ComcastTWC
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This week's sponsor is Clearleap.

By Jim Barthold

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3. Comcast's Cohen pleads merger case to FCC officials

Warren Buffett's Berkshire Hathaway has taken a stake in Charter Communications (NASDAQ: CHTR) and cut its holdings in DirecTV (NASDAQ: DTV).

According to filings with the SEC, Berkshire held about 2.3 million shares of Charter, worth around $361 million as of June 30. At the same time it cut back its stake in DirecTV to 23.5 million shares worth about $2 billion.

DirecTV got a boost in May when AT&T (NYSE: T) announced it planned to acquire the satellite provider for more than $48 billion. At the time, Buffett deputies Todd Combs and Ted Weschler released a statement supporting the deal. A Bloomberg story said Buffett didn't return a message asking whether Berkshire cut its stake before or after that deal was announced.

The media reshuffling drew the approval of Jeff Matthews, an author who's written about Buffett.

"They did a great job with DirecTV," Matthews told Bloomberg. "They made a ton of dough."

In addition to Charter and DirecTV, Berskshire said it increased its investment in Verizon (NYSE: VZ) to 15 million shares worth about $735 million and sold its entire interest in pay TV channel Starz.

Overall, Berkshire's media plays paint "telecom and cable as mature industries," Jackdaw Research analyst Jan Dawson told Bloomberg, calling Verizon and Charter "blue chip companies, probably more stable with relatively less risk."

Charter, in particular, has been getting a lot of financial investment with Liberty Media leader John Malone continuing to build his position as the company's largest shareholder.

For more:
- Bloomberg has this story
- MarketWatch has this story

Read more about: AT&TDirecTV, Berkshire Hathaway
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By Jim Barthold

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4. Grupo Televisa buys Cablecom; strengthens cable TV position in Mexico

It was a busy week for Comcast (NASDAQ: CMCSA) and the FCC. First it was revealed that the cable operator was ponying up $110,000 to sponsor a dinner fete for FCC Commissioner Mignon Clyburn--later rescinded with the contribution directed elsewhere--then an electronic filing offered details of a meeting between Executive Vice President David Cohen with senior commission officials.

Cohen (Source: Comcast)

In the meeting with senior FCC players Jim Bird, Hilary Burchuk, Hillary DeNigro, William Dever, Lisa Gelb, Jonathan Sallet and Philip Verveer, Cohen "reiterated the many compelling pro-consumer and pro-competitive benefits of the (Time Warner Cable) transactions."

At the same time, an electronic filing from Comcast to FCC secretary Marlene Dortch said Cohen argued that those claiming Comcast would control 50 percent or more of the broadband market had it all wrong. The company will only own about 35.5 percent of "the fixed-only universe of broadband connections and a 15.5 percent share when mobile broadband connections are included," the Comcast letter said.

Concerns about broadband market dominance, the letter said, should also be further alleviated because "Comcast and TWC serve almost entirely distinct geographic areas."

The same can be said for the video market where the combined company would "not pose any competitive concerns relating to the market for purchasing video programming," Cohen added.

At the same time, the company emphasized, smaller programmers like RFD.TV--a point of contention earlier in the week--shouldn't worry.

"Comcast carries over 160 independent networks and since 2011 has launched four new minority-owned or managed independent networks," the letter said.

RFD.TV, though, probably doesn't consider itself in the clear since Comcast also told the commissioners that its decision to carry a network is qualified by "balancing financial costs, opportunity costs, consumer demand and available bandwidth, among other considerations."

The rural TV network doesn't attract a very large audience outside rural markets, so in the eyes of an urban/suburban behemoth like Comcast it might not be viewed as "must carry TV."

Overall, the letter said, "we provided an overview of the status of the transaction review and approval processes at the Department of Justice and state and local levels."

For more:
- Comcast released a copy of this electronic filing

Read more about: David Cohen
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By Jim Barthold

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5. Washington State politicos give FairPoint cable rights-of-way

Broadcast and media player Grupo Televisa created some new waves in the Mexican telecommunications market by acquiring cable TV operator Cablecom at the same time the government is trying to encourage more outside investment.

Televisa issued a short statement on the acquisition, announcing that "in relation to the transaction communicated to the market back in August 1, 2013, it has acquired, pursuant to the applicable regulations, directly and indirectly 100% of the equity interest of Grupo Cable TV, S.A. de C.V. ("Cablecom"), through the conversion of certain debt instruments previously subscribed and a payment of Ps.8,550 million (about $652 million)."

A Wall Street Journal article said the acquisition will add 1.2 million cable, Internet and phone subscribers to Televisa's 5.4 million subscriber universe. In addition to its cable holdings, Televisa controls about 70 percent of Mexico's broadcast market.

The move comes as the Mexican telecom space continues to deal with new state regulations designed break up monopolies controlling the country's telephone and media markets in hopes of bringing more competition to the market.

Carlos Slim's America Movil, facing the prospect of government intervention, in July sold off assets to "reduce its national market share in the Mexican telecommunications market under 50 percent in order to cease being a preponderant economic agent under the terms of the Constitution of the United Mexican States and its implementing legislation," an América Móvil press release stated.

For more:
- Grupo Televisa issued this press release
- The Wall Street Journal has this story (sub. req.)

Read more about: Grupo Televisa
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By Jim Barthold

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