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 The Senate Judiciary Committee held the first public hearing on the
proposed $45.2 billion merger between the two largest U.S. cable
companies, a deal that has raised eyebrows among public interest
groups and some lawmakers. Comcast promises that it will benefit
consumers without eliminating any choices.
"My concern is that as Comcast continues to get bigger, it will have
even more power to exercise its leverage and squeeze consumers,"
said Senator Al Franken, a Minnesota Democrat who has often opposed
media concentration.
"I'm against this deal," Franken added. "I believe this deal will
result in fewer choices, higher prices, and even worse service for
my constituents."
Lawmakers can be a powerful voice on merger deliberations although
they will have no formal role in deciding whether the Comcast deal
gets the green light from the Justice Department, which ensures the
merger complies with antitrust law, and the Federal Communications
Commission, which has a broader public-interest standard.
In a bid to make the merger more palatable, Comcast has pledged to
divest 3 million subscribers, keeping the combined company's
customer base just under 30 percent of the U.S. pay television
market. The merged company would also serve between 20 percent and
40 percent of the high-speed Internet market, Comcast said in a
filing on Tuesday with the FCC.
"If this transaction is approved, it will give us the scale and
reach to innovate and compete against our national and global
competitors. ... The transaction will not lead to any reduction in
competition or consumer choice in any market," Comcast Executive
Vice President David Cohen told lawmakers.
"There is nothing in this transaction will cause anyone's cable
bills to go up," Cohen said, reiterating that the two merging
companies do not compete against each other anywhere.
The company also argues that its rivals no longer consist of other
cable or satellite TV companies, but also companies like Google Inc,
Apple Inc, Netflix Inc and Amazon.com Inc. These companies have made
progress in competing against Comcast with video content, while
cable operators have lost subscribers.
The House of Representatives Judiciary Committee will hold a hearing
on the deal on May 8, the panel said on Wednesday.
NET NEUTRALITY
The FCC's review of the merger is expected to focus on how Comcast
would manage Internet traffic crossing its networks. Senate
Judiciary Committee Chairman Patrick Leahy, a Vermont Democrat,
urged Comcast to extend its commitment to so-called network
neutrality beyond 2018.
In January a court struck down FCC's net neutrality rules that ban
Internet providers from slowing down or blocking access to content
online, but Comcast remains bound by them through 2018 as a
condition of its 2011 merger with NBC Universal.
"The conditions that currently apply to Comcast should not be seen
as the end point, but rather the minimum level of protection that
should apply to promote competition online," Leahy said. "I urge
Comcast to support stronger rules that will protect consumers and
drive innovation."
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Cohen replied that the FCC, which is looking to rewrite the rules,
would probably get new industrywide net neutrality rules in place
quickly enough that Comcast would not need to make such a
commitment. "I can't imagine that the commission is not going to
have those rules in place well before 2018," he said.
Cohen, sitting next to Time Warner Cable's finance chief Arthur
Minson, testified alongside an independent programmer and a smaller
Wi-Fi company who said they worried the larger Comcast would use its
power to bully them.
Senator Richard Blumenthal said he was concerned that a bigger
Comcast would have a strong incentive to overcharge for sports
programming sold to other broadcasters.
He also noted that cable bills were going up faster than inflation.
"These markets are plagued with anticompetitive conduct," said the
Connecticut Democrat.
While large content providers such as Disney have few concerns about
the merger, some small, upcoming channels worry that a bigger,
stronger Comcast will essentially decide if they succeed or fail.
James Bosworth, head of the golf-oriented Back9 Network, said
Comcast was reluctant to pick up independent programming that
competed against its own, like the Golf Channel.
The Internet is not a viable option for new channels because online
advertising rates are so much lower than broadcast rates,
Bosworth told lawmakers. "Americans watch 20 times more video on
television than online," he added.
Their concerns were echoed by Gene Kimmelman, a former Justice
Department antitrust official who is now a vocal opponent of the
merger as head of Washington-based public interest group Public
Knowledge.
"The issue before antitrust officials and communications regulators
is really very, very simple," Kimmelman said. "If we want more
innovative, low-price Internet-delivered services, this merger must
be rejected."
(Reporting by Diane Bartz and Alina Selyukh;
additional reporting by
Liana B. Baker; editing by Ros Krasny, Bernard Orr and Jonathan
Oatis)
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