CEO Daily: Wednesday, May 20

Take some time to read Michal Lev-Ram’s excellent piece on Comcast’s epic fail in its quest to win government approval for a merger with Time Warner Cable, which will appear in the June issue of Fortune and is out today online. The company skillfully employed all the standard tools of influence in Washington – political connections, gobs of campaign cash, armies of lobbyists. But it was defeated by an onslaught of opposition from virtually everyone it has touched over the years – including its own customers.

We think there’s a broader lesson here for business. As Moises Naim lays out in his excellent book, The End of Power, the 20^th Century approach to exerting influence doesn’t work so well in the 21^st. Technology has flattened hierarchies and spread power more broadly. Companies need to have their customers, partners, employees and the communities they serve on their side in a battle like this, or face trouble.

So Comcast is now going back to basics, investing big money in improving its notoriously bad customer service. Meanwhile, it looks like Time Warner Cable may have a new suitor.

Enjoy the day.

Top News

• How Comcast lost its influence

When the proposal to combine America's two largest cable providers, Comcast and Time Warner Cable, was first floated, a number of politicians and nonprofit groups wrote letters of support to the FCC. But having friends in high places didn't stop the deal from getting squashed. And it wasn't just a backlash from cable-hating subscribers. Fortune takes a deep dive to discover the broad coalition of businesses that made strange bedfellows in the fight against Comcast.  Fortune

• Time Warner has a new suitor 

Speaking of Time Warner, it appears the cable company has a new suitor. Last night, Reuters reported that French telecommunications group Altice held talks to buy Time Warner Cable and is close to buying a smaller peer, Suddenlink. The negotiations for Suddenlink are more advanced and a deal could be worth $10 billion. Either deal would take Altice into the U.S. market for the first time.  Fortune

• Etsy reports huge quarterly loss 

Shares of Etsy tumbled after the online crafts marketplace reported a steep quarterly loss of $36.6 million, a deep dive into the red that the company blamed on a tax provision linked to corporate restructuring. And while revenue soared 44%, the increase was just a tad shy of Wall Street forecasts. The results were the first from Etsy since it went public in April.  Fortune

• Debit-card theft from ATMs soars

Debit-card compromises at ATMs located on bank property jumped 174% from Jan. 1 to April 9, compared with the same period last year, a credit-scoring and analytics firm reported, while successful attacks at nonbank machines soared by 317%. Card issuers are stuck with the liability for most fraud transactions but that changes in October, when merchants are on the hook if they don't have new equipment in place.  WSJ (subscription required)

• UBS pays $545 million to settle DOJ claims

The Swiss banking giant has become the latest to offer a guilty plea to the Department of Justice as part of a settlement over manipulation of financial markets. UBS pleaded guilty to one count of wire fraud in relation to its manipulation of the LIBOR benchmark interest rate. The bank has already paid $799 million to U.S. and U.K. authorities in November in a partial settlement of the alleged rigging of FX benchmarks.  Fortune

Around the Water Cooler

• The $10 hedge fund supercomputer

New data shops are leveraging cloud power to help hedge funds and other financial players run complex, big-data computer models. The results are as startling as the cost, which can cost $10. And the rise of cloud computing is also spawning a new Artificial Intelligence industry. 16 AI firms got backing from venture capitalists last year, up from just two in 2010. The amount invested in those startups also soared. Bloomberg

• Buybacks, dividends all that is left in S&P 500

The $1 trillion U.S. companies are on track to return to shareholders in 2015 are expected to constitute the market's entire return this year, according to Goldman Sachs. Goldman Sachs forecasts that the S&P 500 will rise to 2,150 by mid-year before fading to 2,100 by the end of 2015. With S&P stock values have limited scope for further upward expansion, Goldman says dividend yield will be "the sole contributor to total return during the next 12 months."  Bloomberg

• Netflix keeps setting new records

Netflix's shares reached an all time high for the third day in a row on Tuesday, peaking at $628.50 a pop, and some analysts expect the price will keep rising. One analyst speculated that Netflix, which benefits from the growth of Internet TV around the globe, could become the next $100 billion tech firm. Much of the skyrocketing expectations are due to Netflix's rapid growth abroad, including reports that the streaming company could soon enter China.  Wired

• "Downton Abbey" manor on the market

Byfleet Manor, best known today as the set for the Dower House in "Downtown Abbey," has been listed for about $6.2 million, a move by the owner of the home to sell the house as the television series is coming to a close after six seasons. The manor of more than 6,000 square feet sits on about 19 acres and has eight bedrooms and interiors mostly appointed in a traditional style.  Fortune

Fortune's 5 things to know today

FX probe settlement and Target's turnaround — 5 things to know today. Today's story can be found here.