Having grown mainly through acquisition, Comcast has received very low customer service scores, hovering around the lowest when compared to its competitors. Seen from an economist’s point of view, Comcast’s customers will jump ship at some point in time and take their business to its competitors.
Expert opinion suggests that Comcast does not care about customer service, as its financial results haven’t suffered from loss of customers.
“Because the information sector is heavily dependent on repeat consumer business, lower customer satisfaction implies that those companies that bucked the trend and strengthened their customer relationships are likely to take market share, while those that didn’t will face challenges [possible loss of customers] and more price pressure [reducing prices to keep customers],” according to a May press release by The American Customer Satisfaction Index LLC (ACSI).
ACSI rated Comcast a 59 out of 100 in the subscription television service sector, a decrease from 61 at beginning of the year. The highest score of 72 was awarded to Verizon Communications Inc., according to the latest scores released in mid-May.
Comcast, with the rating of 59 and an improvement of 1.5 points, is still on the lowest rung of the ladder when it comes to its telephone service, according to the mid-May scores.
Furthermore, in September 2010, a residential television service satisfaction study conducted by J.D. Power and Associates, a subsidiary of The McGraw-Hill Companies, ranked Comcast in the below average range overall, as well as in all categories, including cost of service, promotions, reliability, and customer service.
“The quality of the contact can pay dividends through decreased intention to switch providers. The stated likelihood of customers to switch providers within the next year declines from 13 percent overall to 7 percent among those who are highly satisfied with their customer service experience,” said Frank Perazzini, director of telecommunications at J.D. Power and Associates, in a September 2010 press release.
Playing It Smart
Comcast announced in May that “Meredith Attwell Baker will join Comcast as Senior Vice President of Government Affairs, NBCUniversal. Ms. Baker currently serves as a member of the Federal Communications Commission [FCC]. Her current term at the Commission expires at the end of June 2011.”
As an FCC commissioner, she voted in January for the approval of the joint venture of NBC Universal and Comcast’s cable and regional sports networks. The only dissenting voice came from Commissioner Michael J. Copps, who believed that this merger would provide Comcast with monopoly power and harm the public interest.
“Comcast’s acquisition of NBC Universal is a transaction like no other that has come before this Commission—ever. … It reaches into virtually every corner of our media and digital landscapes and will affect every citizen in the land. … It confers too much power in one company’s hands,” said Commissioner Copps in a statement published on the FCC website.
The U.S. Department of Justice published a long document discussing ethics rules for those employed within the government. The rule states that those contemplating future employment with a firm must recuse themselves from voting or working on issues pertaining to that firm.
Former FCC Commissioner Baker, as a political appointee and not a career government employee, does not have to abide by the strict government ethics rules. In the Baker situation, if no discussion took place during the FCC deliberations, and the offer came after the voting, Baker can’t be faulted.
Experts on government relations suggest that there is always a fine line between the conduct of those involved in certain negotiations, an unwritten language that promises future employment for positive outcomes, and the knowledge that sitting tight and waiting things out is the best strategy.
“Business as usual in Washington—where the complete capture of government by industry barely raises any eyebrows,” said Craig Aaron, president and CEO of the Free Press and the Free Press Action Fund, in an article on The Huffington Post website. “Such moves between the private sector and the government are common in Washington,” according to the Huffington Post article.
Continued on the next page ... Scrutinizing Comcast’s Intentions
Scrutinizing Comcast’s Intentions
“Comcast is overly focused on its financial transactions and lacks the elements of a successful long-term strategy,” according to Wharton marketing professor Peter Fader in a May Knowledge@Wharton (KW) article dissecting Comcast.
Academia suggests that concentrating on monetary values will not guarantee the firm’s long-term survival. Future profitability hinges on three factors: customer satisfaction, producing a great product or providing a first-class service, and running a tight ship.
For Comcast to be a viable company that will survive in the long term, it should improve its customer service record, which is quite low compared to its competitors.
Academia suggests that this firm has knowledge of consumer behavior at its fingertips, which it could use to build better consumer relationships. But the company’s awareness of its market dominance might prevent it from addressing a major fault, which is lack of decent customer service.
Financially, the company has done well, despite the economic downturn. The latest financial information indicates that sales revenues increased by 31.8 percent between the first quarter of 2010 and 2011 from $9 billion to $12 billion. Since 2006, Comcast’s sales revenue increased by an impressive 52 percent.
The firm’s net profit was $943 million and increased by close to 9 percent between the first quarter of 2010 and the same period in 2011, while profit increased by 63 percent since the same period in 2006. This is a more than satisfactory increase, as many firms are in the red given the harsh economic times.
The firm’s net worth was $44 billion in the first quarter of 2010 and increased to $47 billion by the same period in 2011, a 9.5 percent increase.
Comcast’s stock price was $16.36 on July 7, 1988, when the company went public. On June 1, the stock price was $24.27, which is a miniscule increase, when considering that a company exists to increase stockholders’ wealth.
In reading Comcast’s intention, academia is not impressed. “Their future strategy is to continue to find good deals. That would be fine if they were a bank, but they’re not. They are delivering programming and they are not doing it exceptionally well,” said Fader in the KW article.
Diversity Questioned
Waters stated that among the 13 Comcast board of directors, there is one African-American; among 28 corporate executives, there are two African-Americans; and among 33 division executives, there are three minorities, but none is of African-American descent.
Experts suggest that barriers to holding upper-level positions by minorities, including women, in the entertainment sectors (mainly television, cable networks, and radio) are well-documented.
“Credible involvement of minorities starts at the top and trickles down through every job or position that is necessary to produce and distribute a television program or motion picture,” Waters said.
Acquisition Spree
“It’s becoming clear now that Comcast is just a financially driven company looking to make investments that will pay off,” Fader said.
The Wharton professors suggested that Comcast’s intent is to grow through acquisition and mergers and has forsaken the traditional ways of developing and growing from within.
In 1986, Comcast acquired Group W Cable. In 1988, it bought half of the Storer Communications shares, giving it a majority ownership and with it control over the company, and American Cellular Network Corp.
Some of the other acquisitions that allowed Comcast to grow into the mega company it is today include: Metrophone; the American division of Maclean-Hunter, a Canadian communications company; AT&T Broadband; National Digital Television Center, located in Centennial, Colo.; and NBC Universal.
Comcast has not made an attempt to take on the mobile market, as have other media companies. Therefore, KW professors predict that Comcast might try to establish dominance through means not quite understood yet, although the company said during the first quarter 2011 earnings call that it had taken on enough acquisitions and needs to incorporate the latest acquisition into its corporate culture first before it could discuss any future acquisitions.
The Wharton professors are skeptical. “Of the major media companies, Comcast has the smallest footprint in mobile. I would certainly think they are looking very carefully at that. I’m certain they are thinking hard about how to ensure they have a strong position in mobile. Whether or not that is with an acquisition or not remains to be seen,” said Kevin Werbach, professor of legal studies and business ethics at Wharton.
Friends Read Free