(Add sports, content, bundling controversies)
By Alina Selyukh and Diane Bartz
WASHINGTON, April 9 Comcast Corp and
Time Warner Cable Inc executives sought to reassure
lawmakers on Wednesday that their planned merger would not send
cable TV prices skyrocketing but found a fair amount of
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
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.
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."
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)