Despite the PR pitch by Time Warner Cable and Comcast explaining why their $45-billion merger is good for you, the consumer -- More innovation! Faster broadband! Better service! -- one of the real driving factors in the deal emerged in a regulatory filing by Comcast on Thursday: Time Warner Cable's CEO, Robert Marcus, stands to walk away with $80 million if the merger closes.
That's what Marcus will receive in salary, bonus and stock as a "golden parachute," assuming he moves on as a result of the change in control. The two parties say they hope to complete the merger by the end of this year, so Marcus will have to keep TWC chugging along at least that long.
But the size of his merger-related payday should make obvious where he'll be focusing the bulk of his managerial effort. During an appearance at a Deutsche Bank investment conference last week, Marcus attested to his team's devotion to a first-class customer experience, but those statements all had the sour-sweet flavor of lip service.
"Over the course of the next year or so, I’m going to be incredibly focused on working with Comcast to obtain the necessary regulatory approvals and get the deal done," he said. He also said, "I’m incredibly focused on bringing a culture to Time Warner Cable that is more performance-oriented, that puts the customer first, that embraces the concepts of empowerment and accountability, that depends on our employees having a passion for winning, and that always tacks back to our core values of doing the right thing."
The question that Marcus didn't explore during his talk was why achieving those goals requires the enhancement of Comcast's cable and Internet monopoly via this merger. That's the question that the Federal Communications Commission will have to answer as it ponders whether to allow this deal to happen. (The U.S. Department of Justice also gets a say.)
For the truth is, as we've reported before, nothing about this merger will enhance the public interest. U.S. Internet speeds rank pathetically low among industrialized countries, largely because Internet providers like Time Warner Cable and Comcast own monopolies in their service areas that eliminate all competition; this deal will intensify that service-deadening effect.
Telecommunications firms have promised for decades that their mega-mergers will mean more innovation and better programming -- Comcast made that promise in 2011, when it took over NBCUniversal -- and what's happened instead has been merely the concentration of market power in fewer hands. Every time a new merger opportunity arises, the parties tell the FCC: Thanks for the last merger, but we need just a teensy bit more to make all our promises really come true.
Comcast's disclosure of Marcus' payday (and not only Marcus; three of his top lieutenants stand to collect $55 million among them) sheds light on what's really behind such mergers. It's not the building of a transformative culture, but the cashing in of transformative sums. Over the next year, executives who should be focused like lasers on providing better service to TWC customers at lower cost will be focused instead on the desire to line their pockets -- excuse me, I meant to say "maximize value for shareholders," which is how Marcus described it at the investor conference.
The FCC should recognize that all the jabber they'll be hearing about improving the customer experience is secondary and skimming millions off the top is the primary point of this deal. Their answer to Marcus and his colleagues should be, nice try but no sale.