Comcast's proposed $45 billion purchase of Time Warner Cable won't violate U.S. antitrust laws or federal public interest rules, a senior Comcast executive said over the weekend. On the contrary, a merger between the two largest cable companies in the country will be great for consumers, Comcast executive vice president David L. Cohen said in an interview with C-SPAN.
Cohen made his comments as opposition to the deal continues to grow from public interest groups, lawmakers, and industry observers. Critics of the deal say the merger would concentrate too much market power in the hands of a single media and entertainment behemoth, potentially leading to higher prices for consumers. Comcast dismisses such fears and insists that the merger will result in better service for consumers.
The Justice Department is examining the proposed deal to make sure it doesn't violate antitrust law, along with more than two dozen state attorneys general who have joined a multi-state group reviewing the transaction. The merger also faces scrutiny from the Federal Communications Commission, which is charged with ensuring that the deal serves the public interest.
"This transaction is all about increasing competition and creating more consumer benefit as a result of gaining additional scale," Cohen told C-SPAN. Comcast says that the deal isn't anticompetitive because the two companies don't compete for consumers in the same markets. Over the last few decades, the nation's largest cable TV companies have divided up the U.S. by region so that the major players now dominate their respective areas.
Comcast rules in Philadelphia, Chicago and Boston. Time Warner Cable dominates in New York City, Dallas and Los Angeles. Cohen says that the combined company would control no more that 30% of the national pay-TV market. (Time Warner Cable was spun off from TIME parent Time Warner in 2009.)
Cable TV represents a shrinking part of the industry. Last year, cable providers lost nearly 2 million video subscriptions, the first full-year decline on record, according to a recent study by research group SNL Kagan. It's the latest sign that consumers are increasingly "cutting the cord" and gravitating toward Internet-based entertainment options like Netflix and Hulu.
As the Internet has become a crucial tool for commerce, communications and entertainment, companies like Comcast and Time Warner Cable are increasingly becoming broadband companies. The old distinctions between cable TV, Internet, and phone service are starting to collapse. Millions of Americans now subscribe to bundled packages that combine all three services through a single pipe coming into their homes.
If Comcast buys Time Warner Cable, the company would have nearly 40% of the high-speed wireline broadband Internet market in the U.S., according to industry estimates. Critics of the deal say that would give Comcast an alarming amount of power over the 21st century's signature communications medium.
Cohen acknowledges that the deal's implications for the broadband market are "appropriate to think about and discuss," but argues that it's "not a very scary story," due to increasing competition from wireless broadband. "I think it's indisputable today that wireless is certainly beginning to be an effective competitor and substitute for at least many uses of broadband," Cohen said. (Harvard Law School professor Susan Crawford, a fierce critic of the deal, disputes that assertion. Wireless broadband service "will not substitute" for high-speed wired access, she told TIME last year.)
Comcast argues that bigger is better. "Sometimes big is a bad thing," said Cohen. "I acknowledge that. But sometimes big is really important, really necessary and really good. And that would tend to be in high capital expenditure industries, in industries where innovation is fast moving and where you need a lot of investment in R&D and innovation to keep pace. And that is our industry." He added: "The rationale for this transaction is all about scale. We are going to get bigger."
Cohen dismissed opponents of the proposed merger as "the same group of people” who have opposed media and telecom consolidation over the last two decades. Their "sky is going to fall" predictions have been "discredited and disproven," Cohen said. "I have been struck by the absence of rational, knowledgeable voices in this space coming out in opposition or even raising serious questions about the transaction," Cohen added.
Last month, editors at The Economist magazine wrote a sharply-worded editorial against the deal, urging U.S. officials to "reject a merger that would reduce competition, provide no benefit to consumers and sap the incentive to innovate." A former FCC commissioner has called the deal "an affront to the public interest." The New York Times editorial board raised substantive concerns about the deal, as did columnists at The New Yorker and The Washington Post. Harvard Law professor Susan Crawford, perhaps the deal's most persuasive critic, argues that broadband Internet access should be viewed as a public utility.