Comcast to face trio of critics at congressional merger hearing

[May 08, 2014]  By Diane Bartz

WASHINGTON (Reuters) — Comcast's plan to merge with Time Warner Cable Inc is expected to face criticism from an independent network, small and medium-sized cable operators and a former Internet partner when U.S. lawmakers meet on Thursday for a second time to discuss the controversial deal.

The House of Representatives Judiciary Committee's antitrust panel will hear from Comcast Corp Executive Vice President David Cohen.

The company argues its proposed $45 billion deal to merge the No. 1 and No. 2 U.S. cable operators would not hurt consumers since the companies overlap geographically in very few places.

Among the critics due to testify is Dave Schaeffer, CEO of Cogent Communications Group Inc, which has been a high-speed go-between for Netflix and Comcast. In February, Netflix Inc agreed to pay Comcast an unknown sum to connect directly.

Shaeffer said in prepared testimony that, after years of free connections "Comcast demanded that Cogent enter into a commercial relationship" to remedy Netflix's balky speed.

Shaeffer said Cogent offered to pay for some hardware costs, but that Comcast had remained silent.

In Comcast's prepared testimony, Cohen argued that Netflix chose the option of a direct connection and that such deals are neither novel nor unusual.

Netflix has been critical of the agreement it made, with one executive calling it "double-dipping" since Comcast customers and Netflix both pay to have the movies and television shows delivered to living rooms.

A second critic of the merger to testify will be Patrick Gottsch, founder of Rural Media Group, whose RFD-TV channel provides programs aimed at farmers and about rural living.

Gottsch complained that, after Comcast bought NBC Universal in 2011, it dropped some television channels.

"Because there is no clear business reason to understand Comcast's decision, we can only speculate that RFD-TV has become competitive with Comcast's affiliated programming," Gottsch wrote in his testimony.

The American Cable Association's Matthew Polka also worried about video programming and urged the Justice Department and Federal Communications Commission, which must review the deal, to ensure Comcast does not raise prices or withhold shows from smaller rivals.

Comcast said on April 28 that it was willing to divest nearly four million subscribers to win approval for the deal. That will leave Comcast with 29 million subscribers if the deal goes through.

The deal was reviewed by the Senate Judiciary Committee on April 9.

(Reporting by Diane Bartz. Editing by Ros Krasny and Andre Grenon)

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