Comcast's (NASDAQ:CMCSA) brand perception isn't much better than that of the New England Patriots. Like the NFL team, the cable giant gets little benefit of the doubt because of what the public sees as its past sins. And, should any actual wrongdoing be found (or even perceived), the public backlash will be intense.
This has not stopped the Patriots or the cable giant from dancing on the edges of the rules. The football team ran unorthodox formations in its two playoff victories -- a perfectly legal choice, but one that infuriated Ravens coach John Harbaugh and further contributed to the public perception of the Pats as rule breakers.
The cable company, which is attempting to gain federal approval for its $45 billion merger with Time Warner Cable (NYSE:TWC), has done something similar, but its legal, sleazy-seeming efforts have largely gone unnoticed.
The Verge found that Comcast has been ghostwriting letters from state and local elected officials to the FCC supporting the merger. Comcast even issued a press release thanking politicians who wrote in favor of the deal, without mentioning that its lobbying and public affairs department drafted some of the letters:
We are especially gratified for the support of mayors and other local officials underscoring the powerful benefits of this transaction for their cities, constituents, and customers because they uniquely understand their local needs and the impact that the enhanced scale, investment, and innovation of Comcast will have on their local communities.
The press release cited dozens of groups that filed comments and letters with the FCC in support of the merger, but The Verge investigation makes one question exactly what is going on.
What's happening here?
Ghostwriting letters, like using an unconventional formation in football, is not illegal. (Ghostwritten letters might not even be a rare practice in the lobbying world.) But both tactics seem questionable, a feeling that is exacerbated when the perpetrator is perceived generally to be up to no good in the first place.
Cable companies and Internet service providers rank at the bottom of the American Customer Satisfaction Index's annual measure of communications industries. According to the latest ACSI results, ISPs dropped 3.1% to an ACSI score of 63 on a 100-point scale, while subscription TV fell 4.4% to 65. These industries, which include many of the same companies, are the worst-performing among 43 tracked by the index.
Comcast and Time Warner Cable have the most dissatisfied customers. Comcast fell 5% to 60, while Time Warner registered the biggest loss in falling 7% to 56.
Basically, Comcast (and Time Warner) are the most disliked players in the most disliked field. Add in the fact that they are highly successful (like the Patriots) and people are going to be inclined to think ill of them. That might not matter for the Patriots, but it's bad news for Comcast as the FCC has shown a recent willingness to be bent by public pressure.
If there is public outcry over the cable company's efforts to pack the FCC inbox with ghostwritten letters, it could result in the merger being denied.
How does Comcast defend itself
Comcast, to its credit, responded to a list of questions sent by The Verge and did not deny writing the letters, though the company stressed that it did not have final say over what the elected officials actually submitted to the FCC.
"We reached out to policy makers, community leaders, business groups and others across the country to detail the public interest benefits of our transaction with Time Warner Cable," Sena Fitzmaurice, a Comcast spokeswoman, told the tech site via email. "When such leaders indicate they'd like to support our transaction in public filings, we've provided them with information on the transaction. All filings are ultimately decided upon by the filers, not Comcast."
Letters from politicians, even local officials, do carry weight with the FCC, the former agency Chairman Michael Copps told The Verge.
Be above reproach
When a regular person is seeking a new job, approval for a loan, or anything else that involves outside scrutiny, he or she acts carefully. It's reasonable to believe a cable company seeking federal approval for a $45 billion merger might do the same, particularly when the public already has some reasons to question the actions of said company.
Learning about the ghostwritten letters could lead the public to mistrust everything Comcast says about the merger. It puts the company in the same lose-lose situation as the Patriots, in which winning is due to cheating and losing is due to failing to cheat.
The Patriots, however, do not need to make it through a vote in order to secure victory Sunday in the Super Bowl. The team only needs to score more points than the Seattle Seahawks.
Comcast needs the FCC to support its merger, and this type of shady manipulation might get the public riled up enough that the agency votes against the deal.
Daniel Kline has no position in any stocks mentioned. He is a huge Patriots fan who believes they win because they have a smarter coach and a better quarterback. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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