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Comcast Blasts TWC Merger Foes

By Katherine Noyes
Sep 25, 2014 6:11 AM PT
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Comcast on Tuesday lashed out at critics of its US$45.2 billion bid for Time Warner Cable, including accusing Discovery Communications of making "extortionate demands."

The proposed merger would result in increased investment, innovation and competition and so is pro-consumer and in the public interest, Comcast maintained.

Discovery "demanded unwarranted business concessions from Comcast as a condition of Discovery's non-opposition to the transaction," Comcast wrote in comments filed with the Federal Communications Commission. "Such extortionate demands are patently improper."

Netflix also drew Comcast's ire.

"As the biggest edge provider and OVD in the country ... one would expect Netflix to act responsibly on the Internet, but instead, Netflix deliberately sent its traffic on routes that could not support it, and ignored other routes that could easily have handled it," the company charged.

'Not Great for Consumers'

Both Netflix and Discovery were ready with rebuttals.

"It is not extortion to demand that Comcast provide its own customers the broadband speeds they've paid for so they can enjoy Netflix," Cliff Edwards, a Netflix spokesperson, told the E-Commerce Times. "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," Edwards added.

"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," he concluded.

A Troubling Strategy

Comcast is "trying to divert attention away from the real issue," said David Leavy, Discovery's chief communications officer.

"Comcast chooses to not talk about the substantial program discounts they currently get, or what they would do post-merger to demand extreme discounts from cable programmers or block the launch of new networks and brands," he added.

"Comcast's silence on the details of key issues like program discounts, and instead, its continued strategy of intimidating voices that are not fully supportive of its position, is troubling," Leavy said.

'Way Over the Top'

Comcast's reaction is "way over the top," telecom industry analyst Jeff Kagan told the E-Commerce Times.

"There are good things that can happen with the merger, but there are bad things as well," he pointed out. "Comcast can't just ignore one side of the ledger."

If Comcast continues to "act like a bully," in fact, "they are making the point that those who are against the merger are making," Kagan said.

In the big picture, though, "pushback is good," he allowed. "It helps regulators structure an acceptable deal."

A Tough Position

Many people tend to underestimate the negotiating power programmers have, noted Doug Brake, a telecom policy analyst at the Information Technology and Innovation Foundation.

"Comcast's strong language may well be justified," he told the E-Commerce Times.

"Unfortunately, the regulator is in the tough position of sorting out legitimate concerns over a larger company from self-serving claims," Brake added.

'A Bunch of Spoiled Kids Arguing'

In the meantime, the companies involved are "using the media to play this thing out, which is absurd," said Dan Rayburn, a principal analyst with Frost & Sullivan.

"We don't have the back-end pieces, we don't know who said what to whom, we don't know what anyone is actually paying," Rayburn explained. "Without any of those details, it's just a bunch of spoiled kids arguing."

However, nothing that's occurred so far regarding the deal is enough to pose a serious threat to its completion, he opined.

"So far it's lots of manufactured things and hurt feelings," Rayburn concluded. "People aren't debating facts -- they're debating opinions, and that stinks."


Katherine Noyes has been reporting on business and technology for decades. You can find her on Twitter and Google+.


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