Congress to hear concerns about Comcast - Time Warner Cable deal

The chief lobbyist for the nation’s small and mid-sized cable operators will tell Congress on Thursday that Comcast Corp.’s proposed acquisition of Time Warner Cable threatens consumers and competition.

In testimony submitted in advance of his appearance before a Thursday House Judiciary Committee hearing on the deal, American Cable Assn. President Matt Polka wrote that the Comcast-Time Warner Cable deal can’t be approved by the Federal Communications Commission and Justice Department without strict conditions to protect smaller pay-TV distributors.

“Consumer hopes for lower prices, greater choice and more competition will be dashed,” Polka said, if the FCC and DOJ “ignore or treat lightly the potential harms” from the Comcast-Time Warner Cable deal.

Specifically, Polka wrote the combination of Comcast and Time Warner Cable’s programming assets, which includes many powerful entertainment and sports networks, would give the merged entity “greater bargining power” when negotiating distribution deals with other multichannel video programming distributors.

In addition, because it would have cable systems reaching 30% of all pay-TV households, a Comcast-Time Warner Cable combination would be able to demand large discounts to carry programming from other content suppliers, “thereby weakening the competitive position of these rivals or perhaps driving them out entirely,” Polka wrote.

It is rare for one segment of the cable industry to publicly attack another. But consolidation among bigger pay-TV distributors has smaller operators nervous about their own future. The ACA represents hundreds of small operators that serve about 10 million customers across the 50 states.

Also scheduled to offer concerns about the Comcast-Time Warner Cable marriage is Dave Schaeffer, chief executive of Cogent Communications Group Inc. Cogent, an Internet service provider, also has a large business as a middle man of sorts transporting Web traffic between content providers including Netflix and broadband distributors.

By acquiring Time Warner Cable, Comcast, already the nation’s largest broadband provider, would have a 40% share of the nation’s broadband homes.

“The sheer size of the merged entity will allow it to exercise control over Internet content in unprecedented ways,” Schaeffer said in his written statement. “One company controlling access to so many of America’s ‘captive eyeballs’ should immediately raise red flags.”

Comcast Executive Vice President David Cohen and Time Warner Cable CEO Rob Marcus jointly submitted a 110-page statement defending the deal, which is valued at more than $40 billion.

In their statement, Cohen and Marcus downplayed the idea that competition would be harmed by their two companies combining and stressed that without a deal they would be at a competitive disadvantage with other media and technology giants.

“The decision of the companies to combine reflects the increasing rivalry and experimentation among national and global companies, including such powerful companies as AT&T, Verizon, DirecTV, Dish, Amazon, Apple, Samsung, Sony, Google, Netflix, and Facebook in competing for consumer attention and loyalty across the broadband ecosystem,” their statement said.

If the deal is approved, the two companies said, they can “invest the billions of dollars required for next-generation technologies, greater service reliability, secure networks, and faster Internet speeds” that will result in bringing “more innovative products and services in to the marketplace, allowing us to meet the needs of American consumers, businesses, and institutions in ways better than the two companies could do separately.”

Follow Joe Flint on Twitter @JBFlint.