Comcast makes the case for Time Warner deal

The mega merger between Comcast and Time Warner is under regulatory review, and Tuesday Comcast went into great detail to make the case that it should go through.

The Wall Street Journal story by Gautham Nagesh and Steven Perlberg outlined these details:

Comcast Corp. on Tuesday submitted a lengthy document to federal regulators to justify its $45 billion proposed purchase of Time Warner Cable. But its filing also had the effect of showing the many ways in which the combined entity could use its leverage over both cable lines and programming to pressure competitors.

In a 180-page statement with the Federal Communications Commission, Comcast walked through the various parts of the media industry that could be affected by the deal, including online video, television programming, and broadband Internet access, as well as local ad sales in the cable market.

So far, Washington has reacted to the proposed acquisition with cautious skepticism. FCC officials say they can’t talk about pending mergers. Many analysts say they expect it will be approved, with conditions imposed by regulators.

The Associated Press (via the Washington Post site) had these details of Comcast’s argument in favor of the merger:

Comcast has agreed to not discriminate against any traffic in its network through 2018 as a condition of its $30 billion purchase of NBCUniversal, which was completed last year. The company vowed to maintain the commitment despite a federal appeals court decision that struck down the FCC-imposed rules in January.

Comcast says pay-TV alternatives like streaming services from Netflix Inc., Amazon.com Inc. and others have created competition in video, while there is at least one broadband Internet competitor in more than 98 percent of its markets.

“Comcast and Time Warner Cable do not compete against each other in any area. So this transaction will not result in any reduction in consumer choice in any market,” said Cohen on a conference call with journalists Tuesday.

Cohen also responded to calls by Netflix CEO Reed Hastings to extend “Net neutrality” protections to the so-called “interconnection” area between major Internet backbone providers such as Comcast. In February, the two companies reached a deal in which Netflix pays Comcast to ensure its video streams faster and more consistently to Comcast subscribers. But Hastings said last month that the fee amounts to an “arbitrary tax” to companies like Comcast that act as gatekeepers to their networks.

The New York Times added in a story by Edward Wyatt and Eric Lipton that those looking to kill the deal were also getting ready to present their case:

Opponents, too, have been gearing up for a fight. A leading critic of the deal, Public Knowledge, a nonprofit group funded in part by donations from Google, DirecTV, Dish Network and other Comcast rivals, has hired SKDKnickerbocker, a prominent public relations firm led by Anita Dunn, a former White House communications director, and Hilary B. Rosen, a Democratic strategist and former lobbyist.

The maneuvers by both sides portend months of wrangling with regulators at the Federal Communications Commission and the Justice Department’s antitrust division — the two entities that have to approve combining the two huge cable TV and Internet service providers.

On a Tuesday call with reporters, the Comcast executive who oversees the company’s government affairs operations, David L. Cohen, made his case in favor of the $45 billion deal.

“There has been a lot of discussion about whether big is bad, and sometimes when companies join together, big can be dangerous,” Mr. Cohen said. “Sometimes big is necessary and good.”

Alina Selyukh and Liana B. Baker wrote for Reuters that Comcast is also arguing that its merger would be good for consumers:

Comcast also made the case that its sales of service including broadband to small and large businesses could present companies with an alternative to telecom providers such as Verizon and AT&T.

The company also reaffirmed its commitment to so-called network neutrality rules, which ban Internet providers from slowing down or blocking access to content online, and that have been struck down by a court as formal FCC rules in January.

Comcast, thanks to a condition placed on its 2011 merger with NBC Universal, is now the only company bound to uphold net neutrality for the next five years and has promised to apply it post-merger when it becomes larger.

The FCC is now reviewing how to rewrite the net neutrality and the treatment of web traffic, including the fees content companies pay Internet service providers in so-called interconnection deals, is likely to be part of the agency’s review of the merger.

Net neutrality is actually a huge point, especially for small businesses. If their pages load slower than bigger alternatives, that could make online sales even harder. Creating a huge company that spans all the major markets might seem like a monopoly, but it if guarantees equal access, then it might not be bad. The caveat is that it’s only for the next five years. What happens after that?