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Deal or No Deal?

Comcast has until Sept. 23 to respond to the host of comments filed last week, but executive vice president and chief diversity officer David Cohen, who is responsible for getting the deal through the Washington, D.C., gauntlet, weighed in with a preliminary response in the form of a Aug. 25 blog post, defending the merger and criticizing the critics. On the other side, a coalition of 65 anti-consolidation activists, including Consumers Union and Common Cause, among others, teamed up to write the Federal Communications Commission a letter outlining why it should put the kibosh on the deal. Here are versions of the case for and against the merger, edited for space.

David Cohen, executive vice president, Comcast:

This transaction will bring numerous public-interest benefits to millions of residential and commercial customers, from faster Internet speeds and greater programming diversity, to next-generation TV, more robust WiFi, more advertising choices and competition, low-cost Internet through our acclaimed Internet Essentials program, and the ability to better serve business customers big and small with innovative products and services tailored to their needs.

[W]e believe this is an approvable transaction and we expect to agree with regulators on conditions that will further enhance the public interest while not being unduly burdensome on our business or consumers.

Negative comments have been filed by organizations purporting to represent the public interest, programmers, competitors, and others. Many of these commenters have raised issues that are not transaction-specific and/or are best addressed separately in industry-wide proceedings.

Among the comments critical of the transaction are from Consumers Union and Common Cause. Like other commenters, they continue to make the same discredited arguments that we’ve demonstrated consistently don’t have any merit. For example, on antitrust, there are no horizontal antitrust concerns as Comcast, Time Warner Cable and Charter [Communications] do not compete for customers in any market, and no customer will lose any choice. The undisputable facts are that the number of video, broadband, and phone providers in every local market in the country will remain the same post-transaction as today. We’ll have essentially the same share of the video market after this deal as we did after earlier approved transactions.

A lot of attention has been paid to our share of the “national” broadband market, where there have been a lot of inaccurate assertions of our market share. We’ve demonstrated, relying on actual facts, that our post-transaction share of wired broadband connections is 35.5%, based on the FCC’s most recent data. And this doesn’t even include the marketplace developments happening every day, including the growth of 4G/LTE connections. Include those, and our post-transaction market share would be a little over 15%.

As in many prior transactions, various parties have attempted to use this review to advance agendas that have nothing to do with this transaction and to seek government support for parochial business interests that in many cases are seeking more money and distribution for themselves.

Even after this transaction, 70% of the multichannel-video market for programmers — be they international conglomerates or independent startups — will not belong to Comcast. That doesn’t even take into account all the marketplace changes and new outlets for programmers that allow them to bypass traditional video providers entirely if they wish.

We also have a stellar record supporting smaller, independent programmers. Comcast carries over 160 independent networks and, since 2011, has launched four new minority-owned or managed independent networks, and has substantially expanded carriage of over 120 independent networks (including diverse networks) — by more than 50 million subscribers.

It is important to remember that for every programmer that wants more money for carriage or expanded carriage, this imposes real costs on consumers and limits the opportunities for other cable networks to gain access to our systems.

In addition, broader marketplace and industry issues are more appropriately handled in general FCC proceedings and not in the context of the Commission’s review of this transaction. For example, some commenters have raised issues related to net Nnutrality and interconnection that are best addressed in the separate Open Internet proceeding and inquiry into interconnection issues that are ongoing at the FCC.

For our part, Comcast remains committed to a free and open Internet and supports the FCC putting in place strong, legally enforceable Open Internet rules, but these rules should apply to all companies, not as unduly burdensome conditions that will prevent us from competing effectively in a highly competitive marketplace.

In response to comments related to diversity, we have been a demonstrated leader in this area and we stand by our partnerships and ongoing initiatives.

Concerns regarding the advertising marketplace are also unfounded. Comcast and Time Warner Cable serve distinct geographic markets and do not compete for cable spot advertising.

The final point that I would like to address, and one that seems to be at the heart of a lot of the opposition to our merger, is the view that any merger between large companies should be opposed because of fears of “media consolidation.” While we understand the skepticism by some, we must look at each case separately, based on facts and analysis, and above all, anchored by antitrust laws. And in this case, as we have described in detail, our getting bigger is better for consumers.

Anti-merger coalition’s letter to the FCC:

A merger between the nation’s two largest cable companies would inevitably lead to unprecedented gatekeeper control over our nation’s telecommunications and media landscape. It would mean higher prices and fewer choices for broadband users and cable customers. It would put too much control over the future of the Internet and our communications infrastructure in one company’s hands and would negatively impact diversity in ownership and content.

Pay TV rates have risen for two straight decades, and Comcast’s rates have gone up as fast as anyone’s despite its scale. Comcast’s executive vice president, David Cohen, made no promises that this merger would rein in those skyrocketing prices, saying there was no guarantee “that customer bills are going to go down or even increase less rapidly.”

This deal would increase Comcast’s service area to almost two-thirds of the U.S. It would allow Comcast to use its increased market power, and increased control over millions more customers, to dictate terms to broadband content providers and increase its leverage over cable programmers. To put it mildly, combining these two firms would lessen competition and harm innovation, but not improve the consumer experience.

Despite all this, Comcast is currently trying to impress Washington by claiming to provide low-cost broadband access to low-income communities and by nominally embracing net neutrality. Yet due to barriers that limit eligibility, customer difficulty with signing up, and lack of outreach even to eligible participants, the company’s Internet Essentials program has not delivered on its promises.

Comcast’s commitment to net neutrality is also problematic to say the least. First, all broadband users deserve strong Open Internet protections, and that’s only possible with Title II reclassification that applies to every broadband provider. Merger conditions that apply only to Comcast are no substitute for rules protecting everyone, no matter how strong those conditions may be. Moreover, the conditions that apply to Comcast today are not permanent. Comcast agreed to net neutrality conditions that run until 2018 to gain approval for its previous merger with NBCUniversal.

After 2018, those conditions expire and Comcast customers would be left without protection absent reclassification and real net neutrality rules. Our rights to connect and communicate should not have an expiration date. Even while these conditions have been in place, Comcast has found ways to manipulate them — using its market power to charge new tolls for Internet content and create special exemptions for its own video services. These kinds of anticompetitive practices would only grow as a result of this merger.

Comcast has a history of misrepresenting its adherence to other merger commitments too. It has been fined for failing to fulfill the standalone broadband service commitments it also made for the NBCUniversal acquisition, and it had to be ordered by the FCC to live up to its commitments about equitable treatment for independent channels. Given this history, no amount of promises or conditions would be good enough to assuage concerns about this merger. The deal needs to be rejected outright.

The transaction is just as concerning for its negative impacts on media localism and diversity. At the state level, firms like Comcast have lobbied for “state franchising” bills that have stripped municipalities of the power to negotiate franchise agreements with cable companies. This merger would also further the need for measures promoting diversity in ownership. The FCC’s most recent statistics found that already low ownership levels for people of color have only gotten worse. Allowing Comcast to merge with Time Warner Cable would only continue the trend away from the diverse local media our communities need.

[T]his merger is not in the public interest. Hundreds of thousands of people around the country have already called on [the FCC] to stop this merger, and an increasing number of people around the country want the opportunity to meet with the FCC face-to-face to provide the data and public input crucial for informed discussions and decisions about this merger. For these reasons, we ask you to reject this deal.