Comcast Fires Back at Merger Opponents

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By Lydia Beyoud

Sept. 24 — Comcast Corp. fired back at opponents to its proposed $45 billion bid to buy Time Warner Cable Inc. on Sept. 24, the day after the Federal Communications Commission's reply comment period on the deal closed.

David L. Cohen, Comcast's executive vice president, told reporters during a Sept. 24 conference call that the company's 337-page reply comment filing brought economic, technical, market data, and other evidence to bear in the hotly-contested proceeding (MB Docket No. 14057).

Cohen said the document seeks to counterbalance the claims of Netflix Inc., Discovery Communications Inc. as well as public interest groups and others that a combination of the nation's top two cable companies would be against public, commercial and consumer interests.

A combination of the two companies would give Comcast control over a third of the U.S. cable market.

Comcast's reply comments demonstrate “the comfort that we've made such an overpowering demonstration” of potential public benefits of the deal, while most of the opposing comments focus on potential harms, he said. “In our reply comments we've demonstrated that the claimed harms are based on misapprehension of fact,” Cohen said.

‘Audacious' Asks

During the call, Cohen said many television programmers and other companies that do business with Comcast had the “sheer audacity” to use “extortion” tactics to seek out better business deals in exchange for support or non-objection to the deal.

Such asks included free backbone interconnection, requests to share advanced advertising technology developed by Comcast, renegotiated program carriage arrangements and others, according to the filing.

Cohen said the “quantifiable” demands would have amounted to $5 billion above current estimates of the company's programming costs over the next several years, resulting in a $4 per month increase for customers by 2019 “and in perpetuity.”

Further, Comcast said filings by opposing parties seek to advance their own self-interest, singling out DISH Network Corp., data carrier Cogent Communications Holdings Inc., Discovery, and Netflix.

‘No Merger Worries.'

Cohen told reporters that he wasn't worried about the possibility of the FCC and the Department of Justice, which is also overseeing the merger review, causing the merger to fall through.

“It's certainly possible that the agencies could pile on enough conditions that I could walk away from the deal,” he said before adding he had “no instinct, no message that we are remotely in that situation.”

Cohen said the company felt much more uncertainty about the fate of its 2013 acquisition of NBCUniversal than it does about it's bid to takeover TWC.

Opponents See ‘Defensive Reaction.'

The “defensive reaction to the thorough evidence that has been put before the FCC show that it's a company that realizes this merger is far from a done deal,” according to a statement from John Bergmayer, a senior staff attorney at Public Knowledge, a Washington-based public policy nonprofit.

The proposed merger would push Comcast “from being merely the largest cable and broadband provider in the country, to controlling nearly half the broadband market nationwide, with a grip on the most valuable television markets,” he said. It would also “significantly increase Comcast's means and ability to act anticompetitively,” including thwarting the development of independent online video competition, said Bergmayer.

“This is not a case of individual businesses looking to get leverage over Comcast, but of an entire industry realizing the threat Comcast poses to open markets and competition,” he said.

‘Intimidation' Tactics

A Discovery spokesman likened Comcast's filing to “intimidating voices that are not fully supportive of its position.”

Of the company's efforts to renegotiate its contract with Comcast after the merger proceeding was announced, Discovery spokesman David Leavey said in a news release: “we are always talking to our distribution partners about realizing fair value for our content across all consumer platforms, and it is very unfortunate that Comcast is trying to divert attention away from the real issue.”

Leavey added that Comcast did not mention in its reply comments the “substantial program discounts they currently get, or what they would do post-merger to demand extreme discounts from cable programmers or block the launch of new networks and brands.”

The company stands by its concerns that Comcast's post-merger size could provide it with increased leverage to impose “onerous terms” on independent programmers that would prevent them from investing in content and brands.

Netflix Rebuttal

Netflix also responded to Comcast's comments, saying in a news release that “it is not extortion to demand that Comcast provide its own customers the broadband speeds they've paid for so they can enjoy Netflix.”

“It is extortion when Comcast fails to provide its own customers the broadband speed they've paid for unless Netflix also pays a ransom,” the video-streaming company said.

“If the merger were to proceed, this one company, Comcast, would have control over high speed residential internet in a majority of American homes and that is clearly not ‘great' for consumers,” Netflix said.

Comcast repeated prior statements in its filing that the merger will foster, rather than harm, competition in the marketplace.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

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