Netflix, Dish file objections to Comcast-Time Warner Cable merger

Reed Hastings, chief executive officer of Netflix Inc.
Reed Hastings, chief executive officer of Netflix Inc. (Bloomberg)
Posted: August 28, 2014

Netflix Inc., Dish Network, and the Los Angeles County government are among organizations opposing Comcast Corp.'s proposed $45 billion acquisition of Time Warner Cable Inc., based on documents filed right up to the midnight Monday deadline with the Federal Communications Commission.

Reed Hastings, chief executive officer of the online streamer Netflix, had signaled that the company could oppose a combined Comcast/Time Warner Cable, which would provide more than one-third of U.S. consumers with high-speed Internet service.

Netflix and similar firms fear that as online streaming threatens the cable-TV business, Comcast - the nation's largest cable-TV operator - has the incentive to thwart streaming companies through its Internet business.

"Comcast may become large enough as a result of this merger to prevent a new [online video distributor] from ever reaching the critical mass necessary to provide viable national service to American consumers," Netflix said in its 250-plus-page filing with the FCC.

Netflix also contended in the filing that the deal could give a combined Comcast/Time Warner Cable the ability to convert "a consumer's Internet experience into something that more closely resembles cable television."

Netflix and Comcast clashed early this year when Netflix accused the cable-TV giant of degrading its stream to Comcast subscribers and forcing it into an interconnection agreement. Comcast denied it had degraded the Netflix service, adding the interconnection agreement benefited Netflix.

Dish Network, a large satellite pay-TV distributor that is also diversifying into online streaming, told the FCC that the Comcast/Time Warner Cable deal should be rejected because of the combined company's Internet market power.

"The merger would dramatically increase the incentive and ability of the combined company to use the weapons available to it" to prevent online streaming companies from reaching a broad audience, Dish wrote the FCC.

Los Angeles County joined with the City of Portland, Ore., Montgomery County, Md., and Ramsey and Washington Counties, Minn., to oppose the deal. The filing noted that "the companies make virtually no specific or enforceable commitments about how or when consumers will benefit from the transaction."

Separately, the City of Los Angeles filed with the FCC and stated its concerns about the transaction. Time Warner Cable and Charter Communications Inc. - which is buying Comcast cable-TV subscribers, along with swapping cable-TV subscribers as part of the complex deal - serve the Los Angeles area.

In February, Comcast announced the all-stock transaction for Time Warner Cable and agreed that it would divest millions of TV and Internet subscribers to placate FCC and Justice Department regulators.

After those divestitures, Comcast/Time Warner Cable's cable systems could serve 75.4 million homes, 68 percent of all households in the United States, according to a filing Monday by the telecommunications trade association Comptel. Comptel petitioned the FCC to reject the deal.

More than 75,000 comments, both for and against, now are part of the public record with the FCC, which last week also requested information from Comcast as it continues its investigation into the proposed acquisition.

David Cohen, Comcast's executive vice president, said in a blog posting Tuesday: "We continue to be gratified by the wide variety of support the transaction is garnering - at last count, almost 400 substantive supportive comments have been filed. They've come from a wide range of supporters, including business development and community organizations, diversity groups, advertisers, programmers, schools and universities, policy makers, and other prominent individuals."

Among those supporters are Mayor Nutter and Chicago Mayor Rahm Emanuel.

Comcast is expected to respond to the public comments by Sept. 23.


bfernandez@phillynews.com

215-854-5897 @bobfernandez1

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