“Too Big To Fail….But Not Too Big To Suck”


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This was the comment of Bill Maher, on a recent “Real Time With Bill Maher” show, responding to the announcement that Time Warner Cable would, prospectively, fold into Comcast Corporation in a $45 billion purchase. He noted that, combined, the two cable systems represent 19 of the 20 largest U.S. markets; and, apart from suppliers like Dish and DirecTv (and so-called ‘cord cutters’, who have cancelled TV service and are using an assortment of streaming services), they have no competitors in these metros.

Further, Maher said, the two companies have the lowest customer satisfaction ratings for customer support and overall value of any cable system. This has been confirmed by both the American Customer Satisfaction Index scores and also subscriber rankings in surveys by Consumer Reports. So, as he asked his panelists, if the principal incentive for Comcast is to reduce costs (amid declining pay-TV demand in the cable industry), where is the benefit for customers in this merger if both companies are known to have questionable service performance?

The Federal Communications Commission will, of course, have a great deal to say about whether this merger goes through or not. Over the past couple of decades, we’ve seen a steady decline in the number of cable companies, from 53 at one point to only 6 now. Addressing some of the early negative reaction to its planned purchase of TWC, which would increase Comcast’s cable base to 30 million subscribers from the 22 million it currently has (a bit less than 30% of the overall market), the company has already stated that it will make some concessions to have the merger approved. But, that said, according to company executives, the proposed cost savings and efficiencies that will “ultimately benefit customers” are not likely to either reduce monthly cable subscription prices or even cause them to rise less rapidly. In part, this is because networks like CBS Corp. and Walt Disney Co. are charging cable companies higher fees to use their programming.

Comcast executives have stated that the value to consumers will come via “quality of service, by quality of offerings, and by technological innovations.” David Cohen, their Executive VP, said that “Putting these two companies together will not deprive a single customer in America of a choice he or she will have today.” He also said “I don’t believe there’s any way to argue that consumers are going to be hurt from a price perspective as a result of this transaction”. But, that said, he also admitted “Frankly, most of the factors that go into customer bills are beyond our control.” Not very encouraging for either current or future customers.

As anyone remotely familiar with Comcast’s history will understand, this is not the first time the company has navigated the river of communications company consolidation: 1995, Scripps, 800,000 subscribers, 1998, Jones Intercable, 1.1 million subscribers; 2000, Lenfest Communications, 1.3 million subscribers. In 2002, they completed acquisition of AT&T Broadband, in a deal worth $72 billion. This increased the company’s base to its current level of 22 million subscribers, and gave them major presence in markets like Atlanta, Boston, Chicago, Dallas- Ft. Worth, Denver, Detroit, Miami, Philadelphia, and San Francisco-Oakland. In a statement issued by Comcast at the time the purchase was announced, again there was a claim that the merger with AT&T would benefit all stakeholders: “Combining Comcast with AT&T Broadband is a once in a lifetime opportunity that creates immediate value and positions the company for additional growth in the future. Shareholders, employees, and customers alike are poised to reap considerable benefits from this remarkable union.”

There have been technological advances, additional content, and enhanced service, over the ensuing thirteen years. But, “immediate value” and “considerable benefits’? In customer research conducted at the time of this merger, there was genuine question regarding the value perceived by the newly acquired AT&T customers. Key findings from a study among customers who discontinued with Comcast post-merger, and also among customers who had been Comcast customers or AT&T customers prior to the merger, poor picture quality (remember, these were the days well before HD), were that service disruption, and high and continually rising prices, represented the key reasons given for defection to a competitor.

Conversely, when asked to rate their current supplier on both key attribute importance (a surrogate measure of performance expectation) and performance itself, the highest priorities were all service-related and emotionally compliance-driven:

– Reliability of cable service
– Availability of customer service when needed
– Speed of service problem resolution
– Responsiveness of customer service staff

On all principal service attributes except ‘speed of service problem resolution’, the new supplier was given higher ratings than either Comcast or AT&T received. And, there were major gaps in all of the above areas. Overall, close to 90% of these defected customers said they would be highly likely to continue the relationship with their new supplier. When correlation analysis was performed, pricing and service performance were the key driving factors. In addition, even if Comcast were now able to offer services which overcame their reasons for defection, very few (only about 10%) said they would be willing to become customers again.

Finally, we’ve often focused on unexpressed and unresolved complaints as leading barometers, or indicators, of possible defection. Few of the customers interviewed indicated problems with their current suppliers; however, as in other studies, problem and complaint issues were frequently surfaced for both Comcast and AT&T.

It should be noted that, having lost a significant number of customers to Verizon’s FiOS, Comcast has an active winback program underway, leveraging quotes from subscribers who have returned to the Xfinity fold. In the usual Macy’s/Gimbel’s customer acquisition and capture theater of war, this marks a marketing change for Comcast. As often observed (and even covered in an entire book, Customer WinBack, with my co-author, consultant Jill Griffin), winback marketing strategies are rather rarely applied, but can be very successful: http://www.summary.com/book-summaries/_/Customer-Winback/

One of the key consumer concerns, especially as it may impact monthly bills, is the cost and control of content. For example, Netflix has agreed to pay Comcast for a exclusive direct connection into its network. As one media analyst noted, “The largest cable company in the nation, on the verge of improving its power to influence broadband policy, is nurturing a class system by capitalizing on its reach as a consumer internet service provider (ISP).” This could, it was further stated, be a ‘game changer’. Media management and control such as this has echoes of Big Brother for customers, and it is all the more reason Comcast should be paying greater attention to the evolving needs, as well as the squeeze on wallets, of its customers.

Perhaps the principal lesson here, assuming that the FCC allows this merger to proceed and ultimately consummate, will be for Comcast to be proactive in building relationships and service delivery. There’s very little that will increase consumer trust more than ‘walking the talk’, delivering against the claims of what benefits customers will stand to receive. Conversely, there’s little that will undermine trust and loyalty faster, and more thoroughly, than underdelivery on promises.

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.


  1. Very good analysis. We also looked into cable providers customer experience recently and found that the business model they use, i.e. channel packaging as oppose to a la cart channel selection, is the most despised attribute for many subscribers.

  2. The channel bundling approach tends to a) confuse customers and b) obfuscate the real value. Sort of like an Oriental restaurant menu with scores of choices – One from Column A, Two from Column B, One from Column C, etc. With an order of six things, you get a free egg roll and soft drink.

    Cable companies are highly unlikely to offer ala carte channel selection. You can be certain they’ve done extensive testing and concluded that customers would have more selective spending proclivities if they could pick and choose channels themselves.


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