Comcast claims competition from Google Fiber, Netflix & Hulu are reasons to approve merger

Time Warner

The $45.2-billion Comcast/Time Warner Cable merger sure is good for the two cable companies, who were already the #1 and #2 cable providers in the U.S. and will now have about 30 million customers combined. But the deal, which the companies hope to close by the end of 2014, will face scrutiny from the FCC under its new chairman, Tom Wheeler (a former cable industry lobbyist), and the U.S. Department of Justice.

And though Comcast and Time Warner claim the merger creates “a pro-consumer cable competitor,” my colleague Stacey Higginbotham, in a post on the deal’s potential winners and losers, puts consumers in the losers column: TWC customers will probably get a cap on their broadband, which they didn’t have before, and Comcast “will gain even more power when it comes to dictating the terms of over a third of the nation’s broadband and TV experience.”

Comcast said Thursday morning that it would divest about 3 million subscribers in order to keep its share of customers post-merger below 30 percent. In a memo Thursday (PDF), Comcast EVP David Cohen listed some of the measures that the company “[intends] to include and expand upon in our public interest filing with the Federal Communications Commission and with the relevant antitrust agency as appropriate.” Among them:

“In today’s market, with national telephone and satellite competitors growing substantially, with Google having launched its 1 GB Google Fiber offering in a number of markets across the country, and consumers having more choice of pay TV providers than ever before, Comcast believes that there can be no justification for denying the company the additional scale that will help it compete more effectively.”

In a separate “public interest benefits summary” (PDF), Comcast and Time Warner Cable laid out reasons they believe that “the MVPD marketplace is more competitive now than ever before”:

“Satellite companies have taken share from traditional cable companies, and the vigorous new entrants like Verizon FiOS and AT&T U-verse have also entered the video and broadband space. Google has also introduced Google Fiber in a number of markets across the country.

Since 2005, satellite subscribers have grown by 7.0 million subscribers; telco subscribers have grown by 10.7 million subscribers; while cable subscribers have declined by 10.4 million subscribers. (Source: SNL Kagan)

A number of online businesses like Apple, Google, Amazon, Hulu, Netflix, and a host of smaller companies are entering the online video space and trying to position themselves as competitors. While we view online businesses as complementary to our business, previous antitrust concerns about further cable consolidation are truly antiquated in light of today’s marketplace realities.”

Ironically, Comcast owns a third of Hulu but is not allowed to influence its business due to regulatory conditions put in place at the time of Comcast’s merger with NBC Universal.

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