Congress Weighs Comcast-Time Warner Merger

WASHINGTON (CN) - Top Comcast and Time Warner Cable executives appeared Thursday before Congress, the second time in a month, to defend their $45 billion merger against antitrust concerns.

Throughout the five-hour marathon hearing held by the House Judiciary Committee's Subcommittee on Regulatory Reform, Commercial and Antitrust Law, politicians reminded the witnesses and the gallery that they were in over their regulatory heads, but that the hearing would serve to inform the public about the massive deal.

"There are those that remember that you could count the number of channels on your fingers depending on your antenna, and there remember struggling with its rabbit ears," said Subcommittee Chairman Spencer Bachus, R-Ala. "We're way past that now."

Comcast and Time Warner Cable agreed to the $45 billion deal in February, aiming to create a massive cable television company for a marketplace in which cable rates have risen twice the rate of inflation.

As he did at a Senate Judiciary Committee hearing in April, Comcast executive vice president David Cohen defended the deal along with Time Warner CEO Robert Marcus.

"The ultimate beneficiary to this investment and heightened competition is the American consumer," said Cohen, who said that the merger will jumpstart global competition and spur innovation in cable television and Internet access.

Opponents of the deal have meanwhile labeled it a threat to cable subscribers and independent programmers alike.

RFD-TV founder Patrick Gottsch, whose independently run network provides programming aimed at rural America, testified that Comcast has already dropped his network in several markets in Colorado and New Mexico based on a bias created by Comcast owning its own networks. Gottsch fears the merger will result in more markets dropping his channel.

Cohen defended the company's decision to drop the network, while stating that RFD-TV is still carried in many markets through Comcast.

Those markets demanded more HD channels, and their bandwidth limitations required it to drop a channel, Cohen said.

Gottsch concluded his testimony by thanking the chairman "for not making me wear a tie."

An abnormally large panel of eight witnesses testified at the hearing, prompting Bachus to deviate from the standard of one round of questioning from the subcommittee to two.

Cogent Communications founder and CEO Dave Schaeffer, American Cable Association CEO Matthew Polka and DeepField Networks CEO Craig Labovitz all testified against the merger, claiming that the deal will strangle competition, eliminate small programmers and make Internet access more challenging.

Former U.S. Justice Department antitrust attorney Allen Grunes testified passionately against the deal, which he says is "very likely illegal."

"The parties know it and that's why they're here trying to fix it, but they can't," Grunes said.

Comcast and Time Warner together would reportedly garner 33 million cable subscribers and broadband users, creating leverage when negotiating with networks over licensing fees and gaining more control over how consumers access television shows and sports coverage.

Digital-content provider Netflix has argued that the deal will create a company with too much power over the delivery of high-speed Internet service. Time Warner shareholders also objected to the deal with a class action lawsuit alleging that Time Warner was letting itself go too cheaply through an unfair process.

Both Republicans and Democrats were wary of the merger, and kept their line of questioning largely to how the merger would affect their constituents.

Cohen couldn't promise that prices would drop after the merger.

"I have a pesky little problem, and that's telling the truth," he said.

He nevertheless assured Rep. Hank Johnson, D-Ga., that his company's cable packages will continue offering a multitude of networks owned by and geared toward minorities.

Columbia Law School professor defended the merger, echoing a sentiment that Cohen and Polka stressed throughout the hearing: the two cable companies don't technically compete in their individual markets.

Others on the panel and the subcommittee meanwhile warned that, even though the companies do not directly compete, their merger would strain competition.

Grunes warned that Comcast could start paying itself higher fees from the networks - like NBC - that it owns, raising the price for other independently owned networks.

The weight of the five-hour hearing fell largely on Cohen who treated it as a public-relations opportunity.

Comcast has said it expects the deal will be approved within nine to 12 months.

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