Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC) filed a merger application on Tuesday, and representatives from the firms will speak before the Senate Judiciary Committee as the companies seek approval from Washington to complete their proposed merger.
The proposed merger is controversial because it would result in the company controlling 19 out of 20 major U.S. markets and providing broadband to 40 percent of the high-speed Internet market, giving an unprecedented amount of power to one company. The companies argue that since cable markets don’t overlap, the merger is not anticompetitive, and they’re hoping to sway regulators with that argument as well.
Consumer rights groups and commentators on the telecom and media industries have said the merger will result in one entity retaining a huge amount of power in cable, broadband, and media content, as Comcast already owns NBC Universal. A long list of groups opposing the merger wrote a letter to Attorney General Eric Holder and Federal Communications Commission head Tom Wheeler, asking that the regulators not approve the merger.
“Comcast has repeatedly flexed its corporate and political muscles to get what it wants, even if that has meant harming competition, consumers and communities. … The Comcast-Time Warner Cable merger would give Comcast unthinkable gatekeeper power over our commercial, social, and civic lives. Everyone from the biggest business to the smallest startup, from elected officials to everyday people, would have to cross through Comcast’s gates,” the letter reads.
Comcast executive David Cohen published a blog post on Tuesday, laying out all the ways in which Comcast believes the merger would benefit consumers. One thing in particular that Comcast could leverage with regulators is net neutrality. The FCC’s net neutrality rules were recently overthrown in court, and now Comcast is the only company in the country that still must comply with open Internet rules, something it agreed to do when it acquired NBC Universal. Cohen said that the merger would result in all of the combined company’s 30 million subscribers having access to the FCC’s idea of a fair and open Internet space.
Cohen also argued that Comcast shouldn’t be viewed as the sole dominator of the cable and broadband industries when it competes with many different types of tech and media companies in different ways. DirecTV (NASDAQ:DTV), Dish Network (NASDAQ:DISH), and Netflix (NASDAQ:NFLX) also provide pay-TV service, and telecom companies like AT&T (NYSE:T) and Verizon (NYSE:VZ) offer broadband service.
“The traditional boundaries between media, communications, and technology are obsolete. The competitive ecosystem in which we operate includes companies with national and even global — scale … who are competing with each other and us in unprecedented ways,” Cohen said. “Many of these companies are far larger than our combined company would be in market capitalization, annual revenues, and/or customers.”
Opponents aren’t buying the company’s arguments. Given the Obama administration’s mixed record on big mergers, it’s still uncertain whether the FCC and the Department of Justice will allow the nation’s two largest cable providers to combine.
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