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Comcast Discounts Market-Power Concerns in Defending Merger With Time Warner Cable

Wednesday, August 27, 2014

By Bryce Baschuk

Aug. 25 — Federal regulators should approve Comcast Corp.'s $45 billion merger with Time Warner Cable Inc. because the proposed deal benefits consumers and won't harm competition, Comcast Executive Vice President David Cohen said in an Aug. 25 blog post.

“We believe this is an approvable transaction and we expect to agree with regulators on conditions that will further enhance the public interest while not being unduly burdensome on our business or consumers,” Cohen wrote.

The success of the deal hinges, in part, on whether Comcast can convince the Federal Communications Commission and the Department of Justice that the merger will serve the public interest and comply with federal antitrust laws.

The blog post came as stakeholders continued to advocate for and against the deal on the last day of the FCC's initial comment period. Reply comments are due Sept. 23 and final comments are due Oct. 8.

Advocacy Campaign Continues

Cohen thanked the authors of more than 200 advocacy letters penned by state policy makers, community organizations, diversity groups, schools and universities.

Their comments reinforce the argument “that this transaction is pro-consumer, pro-competitive, and strongly in the public interest,” Cohen said.

Proponents of the merger generally lauded Comcast's contributions to local communities, its record of support for minority and LGBT communities, and the diversity of its programming. Many praised Comcast's “Internet Essentials” broadband adoption program and urged the FCC to approve the merger in order to expand the program to cities currently served by Time Warner Cable.

Comcast's Internet Essentials program provides eligible consumers with broadband Internet service for $9.95 per month, digital literacy training and an option to purchase subsidized computers for less than $150. The program was launched in 2011 amid Comcast's acquisition of NBC Universal Inc. and was scheduled to expire in June 2014.

‘Gatekeeper' Control

Critics of the deal filed thousands of comments urging the FCC to reject the deal or impose conditions to ensure that diversity, competition and net neutrality are preserved.

Vocal opponents of the deal, such as Sen. Al Franken (D-Minn.), said it would enable Comcast to become a “veritable gatekeeper over vast swaths of the nation's telecommunications industry” and would lead to “higher prices, fewer choices and worse service.” If regulators approve the deal, Comcast will “operate in nineteen of the nation's top twenty markets and forty-three of the top fifty, controlling about two out of every five broadband Internet subscriptions and about a third of all television subscriptions in the country,” Franken said in his comments.

The American Antitrust Institute also panned the deal, which it said is “likely to result in myriad competitive harms and adversely affect consumers,” according to its filing. The deal “raises potentially significant competitive issues, little or no offsetting cost savings or consumer benefits and would be extraordinarily difficult to ‘fix' without structural or behavioral remedies,” the group said.

Consumers Union told regulators that they must conclude “the threat to competition, consumers and the public interest is too great to allow the merger because the harm would be beyond the ability of conditions to repair,” according to its filing.

‘Discredited Arguments.'

Much criticism of the deal is focused on issues that are “not transaction-specific and/or are best addressed separately in industry-wide proceedings,” Cohen said.

Cohen said the “discredited arguments” of public advocacy groups like the Consumers Union and Common Cause “don't have any merit.”

Common Cause and the Consumers Union joined more than 60 public interest groups in opposing the deal, according to commission filings. The groups urged the FCC to reject the merger because it would lead to “higher prices and fewer choices for broadband users and cable customers,” according to their letter.

Specifically the groups said the merger would enable Comcast to “dictate terms to broadband content providers and increase its leverage over cable programmers.” The letter was also signed by Demand Progress, the New America Foundation, and Public Knowledge, among others.

Cohen reaffirmed that there are “no horizontal antitrust concerns” since the companies do not compete for customers in any market. Cohen said there are “no market concentration concerns” since the merged entity's cable and broadband share will not top 30 percent and 35.5 percent, respectively.

Unrelated ‘Agendas' Flagged

Cohen sought to discredit various parties who he said have “attempted to use this review to advance agendas that have nothing to do with this transaction.”

A large number of consumers said they opposed the deal because it would negatively affect their ability to view RFD-TV, a rural TV programmer. Their complaints were spurred by a grassroots campaign organized by Patrick Gottsch, the founder of Rural Media Group Inc.

Cohen did not mention RFD-TV in his blog post but said any attempts to “leverage the transaction for individual company financial interests do not represent an appropriate use of the commission's transaction review process.”

To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

Read Comcast's blog post here: http://corporate.comcast.com/comcast-voices/comments-on-comcast-time-warner-cable-transaction-due-today-at-fcc.

 

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