Sens. Raise Comcast/TWC Hearing Concerns With FCC, Justice

Point to broadband, independent programming access, pricing
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Sen. Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah) the chair and ranking members of the Senate Antitrust Subcommittee, respectively, have written the FCC and Justice Department to highlight concerns raised in the parent Senate Judiciary Committee's marathon April 9 hearing on the proposed Comcast/Time Warner Cable merger.

Among the issues they wanted the agencies to consider in their vetting of the deal was the combined company's share of the broadband video market. "A key element of any analysis of this merger will be the impact it will have on innovation in the markets for internet and video and, in particular, any impact it may have on the development of online video distribution," they wrote in the letter to FCC chairman Tom Wheeler and William Baer, assistant attorney general for antitrust.

Klobuchar and Lee also relayed concerns from the hearing about the deal's reduction of the number of potential outlets for traditional video programming, and its potential to raise prices by raising its rivals' costs.

"Because this transaction will materially increase the buying power of the largest buyer in the market for programming, it is important for your agencies to carefully assess the impact of this transaction on the ability of viable content providers of all types to obtain distribution of their content," they wrote.

They pointed to the testimony of the CEO of golf lifestyle channel Back9Network (Comcast owns The Golf Channel), who suggested that there are only four distributors—Comcast, TWC, DirecTV and Dish—that provide the scale to reach viewers in top markets advertisers are looking for, and that reducing those options would eliminate one of those.

Klobuchar and Lee's last point was about the potential to raise prices for must-have content, including regional sports networks. They cite a letter from the American Cable Association and the Rural Broadband Association talking about the combination of programming assets, but the senators also point out that Comcast says since its sub base does not overlap with TWC, it will be essentially status quo in terms of content, and points to the current arbitration requirements for RSN pricing. Klobuchar and Lee say the issue merits "careful attention" and may also have application to the related spin-off of stations to SpinCo and swaps with Charter that will get Comcast/TWC's sub count below the 30% threshold the FCC used to enforce nationwide.

The legislators are likely not telling Wheeler and Baer anything they don't already know about the importance of online or power over programming. In fact, the letter quotes the FCC from its Comcast/NBCU order when it said that Comcast has "the incentive and ability to hinder the development of rival online video offerings and inhibit potential competition from emerging online video distributors..." The FCC approved that deal, with conditions to prevent any inhibiting.

“We look forward to continuing to work with the antitrust and regulatory agencies as the review of this transaction moves forward,” Comcast said in a statement. “The combination of Comcast and Time Warner Cable will bring real benefits to residential and business customers and consumers will have the same number of choices among providers they do today.”

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