Broadband Cable Association of Pennsylvania


May 5, 2014

A rush among the nation's largest pay-TV and Internet providers to get even bigger could have profound effects on consumers and competition. Telecommunications giant AT&T has approached DirecTV about buying the satellite broadcaster in a bid to become more competitive in the rapidly consolidating pay-television landscape. A potential deal would create a chief rival to Comcast Corp., the nation's largest cable-television operator, which hopes to acquire Time Warner Cable and some customers of Charter Communications. The deal-making spree has consumer activists, media watchdogs and some customers on edge. Consumers could end up on the losing end, they said. "Because everyone is merging together, there aren't a lot of choices anymore," said D'Jaris Yates, a 32 year-old pharmaceutical saleswoman who lives in Los Angeles. "Your bills can become very high when things merge together."

AT&T's talks with DirecTV have taken place at the board level but still are at a preliminary stage, said people familiar with the discussions who were not authorized to speak publicly. There is no guarantee that an agreement will be reached, they said. Neither company would comment on the discussions. But that hasn't stopped industry analysts from speculating what the future holds for cable and satellite providers as the entire industry seems poised for a seismic shift. Driving the consolidation is a sense by smaller industry players that they need heft to compete against a bulked-up Comcast as well as new entrants from Silicon Valley such as Netflix and Google.

The corporate courtships have made other companies potential takeover candidates, including satellite broadcaster Dish Network and Cox Communications. Verizon, the chief rival to AT&T, also is expected to be looking around for its own deal. "It is like the high-school prom, with everyone lining up dates," said Harold Feld, senior vice president of Public Knowledge, a Washington-based media watchdog concerned about the flurry of activity among media companies. The potential for such a radical shift has some analysts worried. "The continued centralization of control over our nation's media and communications industries is nothing more than a recipe for disaster," said Derek Turner, research director of the media-reform group Free Press.

For DirecTV, which has more than 20 million subscribers, a deal with AT&T would allow the satellite operator to seamlessly package its television and high-speed Internet services. One of DirecTV's shortcomings in the high-stakes battle for customers is that it lacks its own broadband service. A combined AT&T and DirecTV would go head-to-head with Comcast, which has spent billions upgrading its networks to improve broadband Internet speeds. Comcast also is looking to take a bite out of the commercial market by offering high-speed Internet and TV service to businesses. AT&T also pays billions of dollars in programming fees each year for U-Verse, and the company would like to gain more leverage against programmers such as Walt Disney Co., 21st Century Fox and Viacom Inc. In recent years, the programmers have had the upper hand in negotiations.

"If you think the cable business is all about video, you've got it wrong," said Gerald R. Faulhaber, an economics and public-policy professor at the Wharton School of the University of Pennsylvania. "Now, cable is all about providing broadband Internet to homes and businesses." Companies have been invading one another's turf as more people get all three services - phone, Internet and pay TV - from one provider. For AT&T, the value and implications of a DirecTV acquisition are enormous. First, DirecTV's signal and quality are considered far superior to AT&T's U-Verse television service. This could allow AT&T to rely on DirecTV for broadcast and free up its fiber lines to increase broadband speeds to U-Verse customers. Los Angeles Times

Being in first place among polls in a statewide or national election is not all its cracked up to be. Sure, you get to look in the rear view mirror with a sly smirk at the others puttering along to catch you. But, you always have to be on guard for the knives aimed at your back. No one knows that more now than Tom Wolf, the front-runner among a field of four Democratic running for governor in the May 20 primary. The York County businessman and former state Revenue Secretary has built a comfortable lead by barring the television airwaves with ads, according to a Morning Call/Muhlenberg College Poll released last week.

Wolf's been under constant attack by fellow Democrats, Congresswoman Allyson Schwartz and state Treasurer Rob McCord. Meanwhile incumbent Gov. Tom Corbett has been launching attacks, too. Here's a rundown of some of the attacks: Schwartz has ripped into Wolf for being richer than she is. She ripped Wolf for donating his paycheck to charity while he was Revenue secretary during a debate Thursday night at Franklin & Marshall College. Schwartz also criticized Wolf for taking out a $4.5 million bank loan to help fund his campaign. But Schwartz and her husband have between $1.9 million and $4.9 million in assets and unearned income, according to Schwartz's 2012 congressional financial disclosure statement.

Based on Schwartz's net worth as well as the money in her campaign war chest, she could have taken out a sizable bank loan or loaned her campaign millions as has McCord, also wealthy, and the other wealthy candidate, Katie McGinty, who has not attacked Wolf. When Wolf called Schwartz's attacks examples of corrosive Washington, D.C. and Harrisburg politics, she stammered.

McCord has labeled Wolf a racist. During the debate, McCord continued to hammer Wolf for his past association as campaign chairman of former York Mayor Charlie Robertson who was acquitted in 2002 in federal court of the death of a black woman while he was a police officer during a 1960s race riot. McCord's criticisms have angered York Mayor Kim Bracey, who is black, and said in a statement Friday:

"I know Tom Wolf and here in Tom's hometown, we're solidly behind him."

While Wolf tries to keep Democrats off his back, Corbett is hitting his flank with a rip that may be a first for a Republican anywhere in Pennsylvania. The Corbett campaign has started flaying Wolf because his York-based company, The Wolf Organization, was registered as a corporation in Delaware, where tax laws are favorable to businesses, in 2006, when he no longer owned it. The company, which Wolf again runs, is still listed as a corporation in Delaware.

The GOP historically has thwarted attempts to close the so-called "Delaware loophole," which allows companies to transfer some taxable costs to Delaware to avoid paying higher Pennsylvania taxes. Corbett's own administration also has claimed the Delaware loophole is not a tax problem for Pennsylvania and Wolf says he pays all his Pennsylvania taxes. But apparently the Delaware loophole does exist - in a campaign. Allentown Morning Call; more in Philadelphia Daily News, Pittsburgh Post-Gazette and Philadelphia Inquirer