Comcast, Time Warner Begin Arguing Their Case for a Merger
Comcast and Time Warner Cable (TWC) are taking the necessary steps toward joining forces, an intention they announced Feb. 13, as part of a $45.2 billion deal in which Comcast would acquire 100 percent of TWC's equity and its roughly 11 million customers.
The cable giants filed a 181-page application and public interest statement with the Federal Communications Commission April 8. The FCC, in a statement, said the "applications have not yet been accepted for filing," but once they are it will "issue a separate public notice announcing that fact and setting forth a pleading schedule."
On April 9, David L. Cohen, executive vice president and chief diversity officer in Public Policy at Comcast, testified before the U.S. Senate Judiciary Committee along with a handful of others on either side of the issue.
Cohen, in his remarks, made three major points: that TWC and Comcast don't directly compete (and so no competition will be lost); that a combined Comcast-TWC will have the resources to do and offer more to Americans, including low-income households and disabled Americans; and that in the current technology landscape, the old boundaries are changing and the companies that Comcast and TWC used to support they now compete with.
Google, for example, is now laying fiber, and Apple is delivering content and services.
"The competitive ecosystem in which we operate includes companies with national and global footprints—like AT&T, Verizon, DirecTV, Dish, Netflix, Amazon, Apple, Sony, Google and Facebook—all of whom are competing with each other, and with us, in unprecedented ways—and all to the benefit of consumers," Cohen said in an April 9 blog post.
"This transaction will give our company the scale that will enable us to make larger investments in R&D, innovation, and infrastructure, so we can compete more effectively in this incredibly dynamic marketplace," he continued. "In fact, many of them have already announced their plans to expand investment in response to our proposed transaction."
Gene Kimmelman, president and CEO of consumer advocacy group Public Knowledge, suggests there are plenty of reasons that a Comcast-TWC merger should send other players in the market scrambling.
The acquisition of the nation's second-largest cable company by the largest cable company and owner of all NBCUniversal content "will threaten the continued viability of nascent competitors and endanger the continued emergence of innovative new video and other types of services delivered over the Internet," Kimmelman said in his testimony, delivered alongside Cohen, to the Senate Judiciary Committee.
If the merger is allowed, Kimmelman continued, Comcast will control nearly 50 percent of high-speed Internet access in the country, 30 percent of multichannel video programming distributor (MVPD) subscribers and nearly 60 percent of cable subscribers.
All this would give Comcast the "incentive" and "leverage," said Kimmelman, to "stifle slowly emerging competition from rivals such as Netflix and Amazon that require high-speed Internet access"; "slow the pace and dictate the direction of equipment, device and service innovation to lock in maximum revenue for Comcast's own infrastructure and business model"; pay content suppliers less, driving up costs for other distributors and for consumers; artificially raise the prices of its programming for its rivals; and position itself as the gatekeeper for new services that rely on fast, reliable broadband.
Cohen, in his written testimony, insisted the deal is in the best interests of competition and the public.
The merger would also "achieve the increased coverage and economies of scale necessary to invest the billions of dollars required for next-generation technologies, greater service reliability, secure networks, and faster Internet speeds," said Cohen.
"This will let us drive more innovative products and services into the marketplace, allowing us to meet the needs of American consumers, businesses, and institutions in ways better than the two companies could do separately."
A decision on the matter isn't expect to come anytime soon.