WASHINGTON – Comcast faced its toughest questioning yet from Sen. Richard Blumenthal (D., Conn.), who said the company had not demonstrated concrete benefits for consumers in its proposed merger with Time Warner Cable.
The deal faces “a high degree of skepticism,” Blumenthal said.
“Where’s the beef? Where’s the 'there' there for consumers?” he asked. “I think the case has yet to be made the consumers will benefit in a really tangible way.”
(Comcast officials have said the merger will spur innovation, bring better internet service and more on demand options to Time Warner customers and give the combined company the scale to invest in new and better products).
But Blumenthal worried that the combined company would have more power to demand high prices for Comcast’s regional sports networks, zeroing in on a specific issue that had not yet been raised at a Wednesday hearing.
“The cost of sports programming continues to rise with no end in sight,” he said.
A bigger Comcast, he said, could deny competitors access to “an economically crucial element of programming.” (Having live local sports - like the Flyers or 76ers' games - is critical to any company hoping to compete with Comcast).
The merger, he added, “will give your company, both the means and incentive to overcharge … that is a practical and hard fact of life.”
Comcast executive vice president David L. Cohen argued that the company won’t have such increased power. Because Comcast and Time Warner don’t overlap, he said, the markets where regional sports networks operate will remain unchanged. In other words, the same competitors Time Warner currently negotiates with in Los Angeles, Comcast will now negotiate with.
“There’s nothing in this transaction that changes what the competitive balance or competitive equilibrium in those markets,” Cohen said.
But Blumenthal said Comcast, as it gets bigger, would have increased bargaining power.
“It’s a bigger entity with more economic power,” and more strength “to withstand potential hostile negotiations.”
Cohen said that since the Comcast-NBCUniversal merger other television providers have had the right to seek arbitration if they were stymied in negotiations for Comcast’s sports networks, but that “no one has done that.”
More from the hearing is here.
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