Comcast, industry reps face off over TWC deal

Comcast and critics of its proposed merger with Time Warner Cable took their case to federal lawmakers in Washington, D.C. Wednesday, hoping to seize an early lead in what is expected to be a long and loud lobbying battle that could create the nation's largest cable and Internet provider.

Members of the Senate Judiciary Committee grilled Comcast executive vice president David Cohen and other industry executives on a wide range of issues, including the merger's impact on cable bill pricing, diversity of programming, financial pressures that could be placed on content providers and other broadband alternatives that may be available if Comcast is given regulators' approval to buy Time Warner Cable for $45 billion.

"I've heard from over 100,000 consumers opposed to this deal. I believe this deal will result in fewer choices and higher prices," Sen. Al Franken, (D-Minn.), one of the most outspoken critics of the deal, told the group gathered to testify.

Comcast and Time Warner Cable, represented by CFO Arthur Minson, reasserted their previously stated arguments for the deal that they say would result in better technology for consumers and more programming choices. Their service markets don't overlap and no competitor in local markets is being in removed as a result, they said.

"We understand the questions that arise anytime two big companies merge," Cohen said. "Our companies serve separate, distinct markets. The transaction will not result in any reduction in competition."

The FCC and the U.S. Justice Department will review the proposal and are expected to issue a ruling by the end of the year. Last week, Comcast submitted information for a pre-merger notification with the Justice Department. The company also submitted its FCC filing Tuesday to begin the review process.

With customers increasingly flocking to streaming video and content providers demanding more payment for their programs, Comcast outbid Charter Communications to buy TWC and gain access to key media markets! that it has coveted, including New York and Los Angeles. The merged company would occupy about 40% of the Internet service market, or about 32 million customers, and serve about 30% of U.S. pay-TV customers.

Their merger deal faces stiff opposition from consumer advocates, satellite TV operators, broadcasters, cable networks, independent video producers and writers.

Comparing the post-merger Comcast to "a nationwide octopus with massive tentacles," Gene Kimmelman, CEO of consumer advocacy group Public Knowledge, said the deal "consolidates too much power, giving Comcast a virtual gatekeeper role."

"If we want more innovative, low-priced internet-delivered services, this merger must be rejected," he said.

Comcast said its technology and operational expertise will enhance TWC's lackluster service, particularly in broadband Internet. Its fully digital network and readiness to accelerate network upgrades in the TWC markets will benefit TWC customers, Cohen said.

Comcast is the nation's largest cable TV provider, but its strategy of selling the merger revolves around its self-portrayal as an industry player besieged by entrenched and emerging competition. Cohen said the post-merger Comcast would face rivalry and experimentation from other Internet service providers, like AT&T and Verizon, and technology companies like Amazon, Apple, Sony, Google and Netflix.

"The robust broadband connectivity that Comcast and TWC deliver to American consumers has enabled some of these and other companies to become global powerhouses, with many of them eclipsing both Comcast and TWC in annual revenues and market capitalization," Cohen said.

Cohen also reiterated the company's stance that the merger will not lead to higher prices, a claim that, critics say, doesn't account for other market factors involving content partners and suppliers. "There's nothing in this transaction that will cause anyone's cable bills to go up," Cohen said, noting cost savings from eliminating duplicativ! e functio! ns.

Kimmelman denounced the claim, saying Comcast "will be in the driver seat" to dictate fees it pays broadcast and cable networks. "You're either in their system or you're not. Squeeze will come from Comcast. (It) will want to save money."

Sen. Patrick Leahy (D-Vt.), the committee chairman, pressed TWC's Minson about executives' "golden-parachute" pay-packages upon completion of the merger. Rob Marcus, CEO of Time Warner Cable, is set to receive a severance payment of $80 million in payment and benefits after the merger, including $20.5 million in cash.

"I'd say that for a transaction of this size and (one) this complex, I think you'll find that they're in line," Minson said.