* Comcast launches formal review by U.S. FCC
* Reiterates pledge to divest 3 million subscribers
* Says merger would not eliminate cable or broadband
(Recasts throughout; adds details on broadband market)
By Alina Selyukh and Liana B. Baker
WASHINGTON/NEW YORK, April 8 Comcast Corp
sought to rebut critics of its planned $45.2 billion
takeover of Time Warner Cable Inc, arguing that
newcomers like Google Inc and Apple Inc would
ensure competition in both Internet and video markets.
In a 175-page filing with the Federal Communications
Commission that kicks off the FCC's review of the deal, Comcast
argues that combined with Time Warner Cable, it will compete
with an "array of sophisticated companies with national or even
global footprints" such as Google, Netflix Inc or
Verizon that have gained ground against Comcast.
"In the evolving video marketplace in which these companies
have thrived, there is no reason why a cable company
should be limited in evolving as well," Comcast's filing said.
"Over the last few years, our competitors have evolved into
being much larger companies by revenue, by cash flow and or by
customers than we are to all have a larger geographic scope than
we have," Comcast Executive Vice President David Cohen told
reporters after the filing was made public on Tuesday.
If approved by the Justice Department and the FCC, the
merger would result in a company that would serve just under 30
percent of the U.S. pay television video market, after Comcast's
plan to divest 3 million subscribers.
The merged provider would also serve between 20 percent and
40 percent of U.S. broadband subscribers, depending on whether
wireless broadband offered by telecom companies is included,
Opponents have raised concerns that the sheer size of the
merged company would give it too much control over what
Americans can watch on television and do online as Comcast
boosts its power as a buyer of web and pay-TV content.
"The great equalizer is that for many of those companies,
they don't own the network in the high-speed video marketplace,"
said Chris Lewis, vice president for government affairs at
consumer interest group Public Knowledge, referring to Google,
Apple, Netflix and other content providers Comcast cited as its
Cohen and Time Warner Cable's finance chief Arthur Minson
are expected to hear about these concerns when they testify at
the Senate Judiciary Committee on Wednesday.
A Reuters/Ipsos online poll last month found a majority of
Americans skeptical about the proposed merger, with 52 percent
of the 1,368 surveyed people saying that mergers such as the
Comcast-Time Warner Cable deal result in less competition and
are bad for consumers.
Comcast shares on Tuesday traded at their lowest level since
the Time Warner deal was announced in February, a four-month low
of $48.24 per share, and were 0.3 percent lower in the session.
Since announcing its bid, Comcast has underscored that the
merger combines two companies that do not directly compete in
any markets, meaning no consumer would lose a choice of an
Internet or cable provider. It has argued that Time Warner
Cable's customers would see a boost in quality of their services
and the speed of their Internet.
However, while lack of direct competition does away with
major antitrust concerns that could trigger a block from the
Justice Department, the FCC gets much broader leeway in
examining whether the deal is in the public interest.
Cohen said in more than 98 percent of the broadband markets
served by Comcast and Time Warner Cable, customers have another
Internet service choice offered by a top-ten telecom provider,
delivered through fiber or new-generation DSL, plus newer
entrants such as Google Fiber.
Comcast also made the case that its sales of service
including broadband to small and large businesses could present
companies with an alternative to telecom providers such as
Verizon and AT&T.
The company also reaffirmed its commitment to so-called
network neutrality rules, which ban Internet providers from
slowing down or blocking access to content online, and that have
been struck down by a court as formal FCC rules in January.
Comcast, thanks to a condition placed on its 2011 merger
with NBC Universal, is now the only company bound to uphold net
neutrality for the next five years and has promised to apply it
post-merger when it becomes larger.
The FCC is now reviewing how to rewrite the net neutrality
and the treatment of web traffic, including the fees content
companies pay Internet service providers in so-called
interconnection deals, is likely to be part of the agency's
review of the merger.
(Editing by Andrew Hay, Bernard Orr)