Comcast Accuses Critics of Extortion in Time Warner Cable Merger

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Comcast claims critics of its merger with Time Warner Cable have sought to curry favors in exchange for supporting the $45 billion deal or stepping back from their previous stance.

The demands have included requests for free backbone interconnection, sharing of advertising technology developed by Comcast, and renegotiation of program carriage arrangements, Comcast told the Federal Communications Commission this week in a 337-page filing. Comcast said critics also have requested that the Philadelphia-based cable giant carry networks that aren’t carried by anyone or don’t exist, expand carriage or hike fees, and make its programming agreements with every programmer renewable on the same date.

The programming demands alone, coupled with related proposed conditions, would cost Comcast as much as $5 billion, according to the filing.

“The significance of this extortion lies in not just the sheer audacity of some of the demands,” Comcast declared, “but also the fact that each of the entities making the ‘ask’ has all but conceded that if its individual business interests are met, then it has no concern whatsoever about the state of the industry, supposed market power going forward, or harm to consumers, competitors or new entrants.”

Comcast explicitly called out some of the alleged extortionists, including the Discovery Channel, which it said “demanded unwarranted business concessions” from the cable giant. Responding to the allegations, a Discovery executive said in a statement, “We stand by our concerns that Comcast could use its enhanced leverage from the proposed merger to impose onerous terms that jeopardize the ability of independent programmers like Discovery to continue investing in a diverse portfolio of content and brands.”

While the FCC filing accused critics of extortion, Comcast stopped short of alleging that anyone broke the law. David Cohen, Comcast executive vice president, told reporters that “we are absolutely not accusing anyone of criminal activity in connection with the transaction,” The Wall Street Journal reported Wednesday.

In a blog posting, Cohen said the merger has received broad support from more than 100 Chambers of Commerce and business organizations, more than 20 programmers, nearly 200 diversity groups and community partners, academics and public policy leaders, and more than 150 state and local leaders.

He also reiterated Comcast’s position that the deal will not reduce competition because it doesn’t presently compete with Time Warner in any markets. But a number of consumer groups still remain opposed to a merger that would combine the two largest cable broadband providers.

“Because Comcast has such a commanding position in distribution and owns a huge slate of national and regional programming, with well over a billion subscribers, it has the incentive and ability to leverage its market power to distort and weaken competition in local, regional and national video and Internet markets,” said Mark Cooper, director of research for the Consumer Federation of America, in a statement last month.

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