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Comcast says merger with Time Warner would enhance competition

By Edward Wyatt

New York Times

POSTED:
LAST UPDATED: 03:53 p.m. HST, Apr 08, 2014


WASHINGTON » Comcast and Time Warner Cable said they would offer increased competition in high-speed Internet and cable television service under a merger, according to documents filed Tuesday with federal regulators.

In a combined company, the improved competition would benefit small businesses, advertisers and consumers, the companies said.

"The traditional boundaries between media, communications and technology are obsolete," David L. Cohen, an executive vice president atComcast, said in an accompanying essay on the company's public policy blog.

Naming companies competing in new ways like AT&T, Verizon, Amazon, Apple and Google, he continued: "Many of these companies are far larger than our combined company would be in market capitalization, annual revenues, and/or customers."

The merger has been opposed by an array of consumer-advocacy groups, members of Congress and competing companies, which have said that it would lead to a dangerous concentration of leverage in the cable and broadband markets.

Against that backdrop, Comcast made its case in a 175-page application and public interest statement that it filed Tuesday with the Federal Communications Commission. Companies must take that step when they are proposing a merger that would result in the transfer of control of federal communications licenses. The Senate Judiciary Committee will examine the antitrust implications of the merger in a hearing Wednesday.

Last week, Comcast and Time Warner Cable formally notified the Justice Department's antitrust division of the merger, in what is known as a Hart-Scott-Rodino notification. The Justice Department has 30 days to request additional information about the merger, which it will all but certainly do, before deciding whether to try to block the deal.

Opponents have warned that Comcast, as the owner of NBCUniversal, a primary provider of programming to video distributors, would be able to charge monopolylike rates for access to its programming and dictate aggressive terms to companies that competed with its cable television business.

In the broadband market, the combined companies would have significant leverage over companies like Netflix, Amazon and YouTube, which rely on Comcast's pipes to get their content to consumers, opponents have said.

Comcast vigorously disputed those claims in its FCC filing, noting that Time Warner Cable and Comcast subscribers overlapped in only a small percentage of markets, affecting 2,800 of the combined companies' roughly 30 million customers.

"By combining these two companies' technological developments and know-how, and their geographic reach, along with Comcast's strong balance sheet, commitment to invest significantly in the TWC systems and substantial expertise in efficiently upgrading cable systems, the post-transaction company will be well-positioned to compete against its national and global competitors, to improve the customer experience today, and to forge ahead to meet future challenges and needs," the companies said.

Public debate about the merger has so far focused on the potential effect on household consumers of the combined companies' service of 30 percent of cable customers and more than 40 percent of high-speed Internet subscribers.

But Comcast's filing also tries to focus regulators' attention on the concerns of small businesses and television and online advertisers.

For example, Cohen wrote, "If you had a real estate business with offices in New York, Boston, and Washington, D.C., Comcast and TWC couldn't easily offer you a seamless business solution for these multiple locations. The same if you had BBQ restaurants in Houston, Dallas, and Austin, Texas. Or a tech startup on the West Coast with programmers in Portland, Seattle, the Bay Area, and Los Angeles.

"Competition in the business market has been long in coming," he added, "and we can take it to a larger scale that will promote economic development."

Both sides have been busy preparing for the battle, which is about to take off. For example, one of the leading opponents of the deal, Public Knowledge, a nonprofit group that is funded in part by donations from Google, DirecTV, Dish Network and other Comcast rivals, has hired SKDK, a prominent public relations firm led by the former White House communications director Anita Dunn and Hilary B. Rosen, a Democratic strategist and former lobbyist.

SKDK specializes in building coalitions to help major corporations move agendas in Washington, organizing what looks a lot like political campaigns. One shortcoming so far is that few major companies have come out and vocally criticized the Comcast deal — or stepped forward to fund it in a big way — a reality that opponents of the transaction realize is handicapping their effort.

The opponents have said they hope that at the antitrust hearing Wednesday, if tough questions are asked, the "air of inevitability" that surrounds the transaction will be replaced by open skepticism. That in turn could lead to corporate executives who are critical of the transaction, but so far afraid to alienate Comcast, taking a public position against the deal.






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