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Comcast/TWC Gets Marathon Going-Over in House - Broadcasting & Cable

Comcast/TWC Gets Marathon Going-Over in House

Judiciary Subcommittee has four hours-plus worth of concerns, observations
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The Comcast/Time Warner Cable deal spent over four hours under the microscope in the second, but likely not last, Hill hearing on the proposed $69 billion deal.

The House Judiciary Committee's Subcommittee on Regulatory Reform, Commercial and Antitrust Law had plenty of questions in the four-hour-plus marathon, with most directed toward Comcast executive VP David Cohen. TWC chairman and CEO Rob Marcus was also on the panel, but seemed more like the Maytag repairman waiting for a call that almost never came.

Among the key focuses of legislators was Republican concerns about whether Comcast would try to keep conservative voices off the air. Cohen said no, it did not do that now, and would not do that in the future. Asked about an email that suggested Comcast was not inclined to give Glenn Beck or The Blaze a platform in front of the 2014 election, Cohen said the company does not make carriage decisions based on politics.

Rep. Blake Farenthold (R-Texas) said he hoped that were the case, otherwise there could be trouble.

Another big concern among legislators in rural districts was Comcast's reduction in carriage of rural-targeted RFD TV, whose founder was also a witness. Cohen said the reduction was primarily a bandwidth issue, that Comcast local systems made the decision that carrying networks like Smithsonian Channel in HD was a better use of bandwidth. But he also pointed out that Comcast's systems were mostly in urban clusters. That seemed to hit a hot button, with several legislators responding they were worried rural viewers would be marginalized.

Ultimately, Cohen said that the RFD cutback was not permanent, something Subcommittee chairman Spencer Bachus (R-Ala.) brought up at the end of the hearing, as if to remind Cohen.

Various members and witnesses—there were eight—brought up a host of issues, including the size of the deal, the size of Comcast/TWC's potential broadband footprint, the impact on the cable advertising market, peering, the company's ability or incentive to favor or disfavor content, and a host of others.

Cohen said that sometimes size could be good, as in the case with this deal, since it would give the combined companies the scale to compete with other national players and the ability to upgrade service to consumers.

But the size most legislators were talking about was the 30% (29%, Cohen corrected) of video subs it would have, the 40% or 50% or 60% of broadband subs, and the 82% of the cable ad market. Cohen disputed that 82%, but said even at that it was only 82% of cable's 7% of the total ad pie, which he said hardly raised anticompetitive issues.

Rep. Darrell Issa (R-Calif.), said he thought the committee should think more broadly about not just whether the deal could check the boxes on not being anticompetitive, but whether it also promoted access, though he conceded that was an issue that would need to be addressed in conjunction with the House Energy & Commerce Committee, which has jurisdiction over other parts of the deal, and the FCC, whose review goes beyond antitrust to look at public interest values.

There was not an easy divide between pro-business Republicans and concentration critics on the Democratic side. Republicans had concerns about political speech, serving rural viewers, and access by independent programmers.

Cohen made a number of promises, including continued focus on promoting diverse programming and ownership, extending low-cost broadband, and saying that the company would permit TV One to buy out Comcast's minority stake in the African American-targeted cable channel if it wants to.

Peering was a bone of contention. Witness Dave Schaeffer of Cogent Communications (the middleman cut out of the Netflix/Comcast peering deal, said Comcast has not been a good "net citizen" and would be a worse one if the deal were approved. He said that would allow the combined company to charge a toll to edge startups who depend on inexpensive connectivity. He said Comcast had allowed its service to degrade, would not allow Cogent to upgrade it, and forced Netflix to pay for better service.

Cohen said that was just flat wrong, that Netflix had come to Comcast with the deal and, while he could not talk about the peering deal, cited press reports that Netflix was paying less, not more, to Comcast for the direct connection. He added that he would be glad to talk about the terms of the deal if Netflix would allow it.

The deal took its heaviest criticism from witness Allen Grunes, an antitrust attorney and former DOJ lawyer. He said the deal was probably illegal and the companies knew it. "A merged Comcast and TWC would have both the ability and incentive to withhold sports, entertainment and other programming from other multichannel video programming distributors and harm competition," he said.

Grunes was particularly concerned about the company's broadband clout. He said if Comcast has 50% of broadband subs, it can affect how over-the-top video develops. He said he did not believe behavioral conditions were sufficient to address all the harms he saw, and that the best remedy would be to "just say no."

Rep. John Conyers (D-Mich.), ranking member of the parent Judiciary Committee, said he thought there would probably be a need for another hearing given the complexity of the issues.

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