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Cohen: TWC 'Asks' Shouldn't Be Cloaked In Rhetoric

Comcast executive vice president David Cohen Wednesday hammered home his criticism of Netflix and other Time Warner Cable deal critics, saying Discovery was the "poster child" for inappropriate complaints being made by programmers, and that Netflix had tried to dump traffic and slow its user's online experience in order to shift interconnection costs from itself to Comcast.

Cohen talked to reporters Wednesday (Sept. 24) about the Company's voluminous reply comments at the FCC (something close to 1,000 pages including exhibits).

He was asked about his tough charges that some of the critics were trying to extort various "asks" from the company in exchange for their support or at least silence on the deal, or that the deal's public advocacy groups were "chicken little" with shopworn arguments.

He said he thought comments were "fair and direct."

Cohen said he was not suggesting that there was anything illegal, or even unexpected, in the use of the term "extortion."

But he wanted to make the point that such "asks" should not be cloaked in consumer-focused or public interest or policy issue rhetoric, given he said those same "askers" had signaled that if they got their particular business interest, they would essentially have no problem with the deal.

He said the Discovery, Dish and other critics are clearly promoting their own business interests, "which they are obviously entitled to do. But that motivation is not necessarily consistent with the public or consumer interests."

"The facts are that Discovery demanded unwarranted business concessions from Comcast as a condition to not oppose our transaction." He conceded such demands are common, but said it did not make them transaction-specific arguments.

He also signaled that he thought Discovery hardly needed the government's help to get its deals done. He pointed to the company's $25 billion market capitalization, 47 cable nets, and big name board members and investors, saying "Discover does not need additional regulatory help to succeed in the marketplace."

He was just as clear on where he though Netflix was coming from in criticizing the deal and the issue of traffic exchanges in Internet the backbone. Netflix has complained about a paid peering deal it struck with Comcast.

"This was a business dispute. This was part of a strategy by Netflix, and maybe by Netflix and Cogent, to create a problem in the backbone in order to make a broader point that had nothing to do with the consumer interest, which was that they wanted to make the point that it was better for them to have free interconnection."

"It is not extortion to demand that  Comcast provide its own customers the broadband speeds they've paid for so they can enjoy Netflix," a Netflix spokesman responded. "It is extortion when Comcast fails to provide its own customers the broadband speed they've paid for unless Netflix also pays a ransom. Netflix grudgingly paid to improve performance for our mutual customers, a precedent that remains damaging for consumers (who ultimately pay higher costs) and for other innovative businesses (that can be held over the barrel by Comcast to do the same.) If the merger were to proceed, this one company.

Comcast would have control over high speed residential internet in a majority of American homes and that is clearly not "great" for consumers."

“All we have ever asked for is a level playing field for all programmers and a chance for all networks to get their messages to consumers," said Eric Sherman, CEO of indepedendent cable network, Veria Living, in response to Comcast's filing. "For a giant like Comcast – which is about to control 28 of the nation’s top 30 markets – to accuse us of extortion is absurd. The FCC and Congress invited independent programmers to share with policymakers their frustration with Comcast as part of the merger review process. We have done that in an open and honest manner, providing testimony and talking with regulators on the record.

"Faced with overwhelming public opposition and thousands of legal filings from varied interests, Comcast has resorted to disparaging those who raise legitimate public policy concerns about the transaction," said Lynne Costantini, president of business development for TheBlaze. "TheBlaze has not sought to extort anything from Comcast in connection with the merger.  We have simply exercised our 1st Amendment right to petition the government and, over the past 2+ years, tried to engage in meaningful and fair negotiations with Comcast to carry TheBlaze -- a network that its customers have overwhelmingly requested.  This unabashed arrogance is emblematic of the way Comcast strong arms its suppliers and neglects its customers.  This type of behavior is precisely why the proposed transaction is not in the public interest and why the Federal Communications Commission and the Department of Justice should reject this merger unless rigorous conditions are in place."

“We speak for consumers when we argue that Comcast should be required to provide a clear, transparent and fair route for independents to be considered for carriage. That has not been the case.”

“The arrogant tone and sense of entitlement displayed in the opposition papers of Comcast provide useful insight into how the combined company will treat the American consumer and competitors if this merger is approved,” said Dish in a statement. “This is especially concerning given that the combined company will control half of the high-speed broadband connections in the United States immediately, and be on a path to virtual dominance of the high-speed broadband market in the United States given that the combined company will pass close to 70% of pay-TV households.  Stripped of Comcast’s rhetoric, the facts and the law demonstrate that this merger should be denied.  It is not a close call.”

Cohen said he did not think the deal woud be loaded with onerous conditions and that the FCC would recognize the non-transaction-specific nature of many of the criticisms.

Cohen said the bottom line was that the deals many public interest benefits had gone essentially unchallenged by its critics, and that the transaction harms they posited were either off base or off point.