The American Cable Association and NTCA: The Rural Broadband Association, wrote the Senate Judiciary Committee in advance of Tuesday's hearing on the proposed Comcast/TWC merger saying that as currently constituted it would cause harms to consumers and competition.
They say Comcast's public interest statement, which includes a number of voluntary conditions, many it would be extending from those in its NBCU deal, are not sufficient to address its concerns about the impact "downstream" on the MVPDs, "upstream" on the video programming industry via a combined company's 16 regional sports networks, and the combination of Comcast's programming assets and TWC's distribution assets, which include systems in New York and L.A., the top two markets.
They argue the deal has both horizontal and vertical components and that the deal needs to be vetted for both.
"We are concerned that the combination of Comcast’s programming assets with TWC’s RSNs will allow the merged entity to exercise greater bargaining power against all MVPDs that carry this programming, by bundling more 'must have' programming together," they told the Committee.
As for vertical issues, they say the merged company would have an incentive to disadvantage competing MVPDs by withholding programming.
They concede Comcast has offered up conditions—which include nondiscriminatory access to online and video programming—but they say that, while well intended, those are hardly sufficient to solve the problems in the deal.
For example, they say, the outside arbitration is too expensive for the small and midsized MVPDs they represent.
And while Comcast has argued there is no horizontal problem with the merger, the groups say that their increased sub count will mean increased leverage in programming negotiations
"With more than 30% of all MVPD subscribers, the merged entity will become a 'must have' distribution outlet for programmers," they argue. "In the short run, the merged entity will gain additional competitive advantages over its MVPD competitors, through demanding larger volume discounts than its rivals are able to obtain, thereby weakening the competitive position of these rivals or perhaps driving them out of business entirely. Programmers subject to the enhanced bargaining power of Comcast-TWC will seek to make up for lost revenues either by charging higher prices to other MVPDs or by reducing their investments in programming. In the longer run, Comcast-TWC may be able to leverage its increased dominance in the MVPD industry to increase its market share in the video programming industry."
They stopped short of outright opposing the deal, but said they were collecting more info, and in the meantime would be willing to work with the committee and FCC on fixing the Comcast/TWC conditions they say fall short.
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