Comcast accuses merger foes of ‘extortion’

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Comcast (NASDAQ: CMCSA) has filed a rebuttal totaling 337 pages to the FCC, accusing opponents of its proposed acquisition of Time Warner Cable (NYSE: TWC) of using their voice in the regulatory process to “extort” business advantages.

In a Tuesday blog post on Comcast’s corporate blog, company executive VP David Cohen signaled the filing’s harsh, defiant tone. That promise was delivered upon Wednesday morning, when the memo went public.

Among a range of accusations leveled against merger critics, Comcast accused Netflix (NASDAQ: NFLX) of ginning up congestion on its broadband network earlier this year for the purpose of intentionally putting the spotlight on interconnection fees it wants to see regulated away by the FCC.

The Philadelphia conglomerate took Discovery Communications to task as well, accusing the programmer of seeking business concessions as a condition of not opposing the merger.

All told, Comcast said demands for carriage price concessions as a condition of not opposing the merger would have raised overall programming costs by around $5 billion over projections in the coming years, adding more than $4 a month to customers’ bills by 2019.

“The significance of this extortion lies in not just the sheer audacity of some of the demands, but also the fact that each of the entities making the ‘ask’ has all but conceded that if its individual business interests are met, then it has no concern whatsoever about the state of the industry, supposed market power going forward, or harm to consumers, competitors or new entrants,” Comcast said in the filing.

For his part, media analyst Craig Moffett doesn’t believe the FCC needs Comcast to tell it which dissenting voices have credibility. “Regulators are a sophisticated audience,” he toldThe New York Times. “They can assess the merits of the various arguments without having to be coached on what incentives might be behind why someone did or didn’t say what they did.”

Of course, those subject to Comcast’s assault Wednesday fired back with statements. Netflix, for example, released the following: “It is not extortion to demand that Comcast provide its own customers the broadband speeds they’ve paid for so they can enjoy Netflix. It is extortion when Comcast fails to provide its own customers the broadband speed they’ve paid for unless Netflix also pays a ransom.

“Netflix grudgingly paid to improve performance for our mutual customers, a precedent that remains damaging for consumers (who ultimately pay higher costs) and for other innovative businesses (that can be held over the barrel by Comcast to do the same) If the merger were to proceed, this one company, Comcast, would have control over high speed residential internet in a majority of American homes and that is clearly not ‘great’ for consumers.”

For more:
– read this Comcast FCC filing (PDF)
– read this New York Times story (sub. req.)
– read this Wall Street Journal story (sub. req.)

Related links:
When Cohen attacks: Comcast exec lays into merger critics at commentary deadline
Comcast-TWC input period ends: 64K comments received, 65 groups urge rejection
Comcast’s Cohen to regulators: ‘Don’t make us the next Blockbuster’

Read more about: ComcastTWCFCC

Jarrett Neil Ridlinghafer
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