By Julian Hattem - 05/08/14 01:51 PM EDT
House lawmakers on Thursday cast a critical eye on the proposed $45 billion merger between the country’s top two cable companies.
“Comcast is a cable company and a programmer,” said Rep. John Conyers (Mich.), the Judiciary Committee’s top Democrat.
“That raises a double concern with me ... and I think the Department of Justice is going to take some little while sorting this out,” he added. “I don’t know if it’s resolvable to be honest with you, at first blush.”
Rep. Blake Farenthold (R-Texas) said that he did not “want to sound hostile to this merger, because I really think that government needs to stay as much out of the business world as possible, but I have had some concerns raised by constituents” about over-consolidation of Spanish-speaking channels.
After the merger, Comcast would be the top player in 37 of the top 40 markets in the country and serve 91 percent of Hispanic households in the country.
People are concerned, Farenthold said, about “the level of vertical integration, the fact that NBC owns so many things that potentially would compete with you.”
To quell some of those concerns, Comcast is shedding millions of customers so that it will control less than 30 percent of the TV market, which has been the traditional line on undue market power. If the deal goes through, the company would also control about 40 percent of the high-speed Internet market.
Executives said that the larger size would help the cable firm compete with companies like Google, Apple and Dish.
“Greater scale will yield more robust competition and significant benefits for consumers and businesses” said Time Warner Cable CEO Robert Marcus.
“In a nutshell, this transaction will give us the scale to invest more in innovation and infrastructure so that we can compete more effectively with our national and global competitors,” added Comcast Executive Vice President David Cohen. “The ultimate beneficiary of this advanced competition and greater investment is the American consumers.”
Final approval for the deal will ultimately come down to regulators at the Federal Communications Commission and the Department of Justice, but hearings in Congress have provided the most public debate on the issue so far.
Thursday’s session in a packed and stuffy hearing room was the first time House lawmakers got a chance to hear from Comcast and Time Warner Cable executives about the planned deal. At a Senate hearing exactly a month ago, a number of senators expressed skepticism that the deal would help out their constituents.
Allen Grunes, a former Justice Department lawyer, testified Thursday that the acquisition could imperil local sports games shown on regional sports networks as well as material owned by NBC. The company could have the incentive to promote its own programming or block others from carrying in-demand TV shows, he said.
“That would drive up their competitors’ cost and make them less competitive,” he told the lawmakers. “This merger is very likely illegal.”
Cohen also said that the company is especially focused on urban residents, a claim that did not sit well with a couple of lawmakers representing rural districts.
Rep. Spencer Bachus (R-Ala.), the chairman of the antitrust subcommittee, noted a “fear that the rural market gets left out” as Comcast consolidates its services and cuts some channels.
“I would just say be sensitive of that, because there are a lot of people in rural America,” he told executives.