Senators grilled Comcast and Time Warner Cable executives on an array of competitive concerns over their proposed merger at a Capitol Hill hearing on Wednesday, but one of the most frequently asked questions was very simple: Will consumers see higher monthly bills?
"I will make one firm commitment that there is absolutely nothing in this transaction that will result in an increase in prices for Comcast customers," David L. Cohen, executive vice president for Comcast.
Al Franken (D-Minn.), who has been a vocal critic of the merger. Franken pressed Cohen on specifics about Comcast's dealings with various competitors and the FCC in the three years since it was granted approval to take over NBCUniversal.
The questions posed by Franken and other members of the Senate Judiciary Committee reflected increasing consumer gripes over rising monthly bills, in many cases well above the rate of inflation. Time Warner Cable, for instance, instituted across-the-board price increases in the past month across an array of channels and services that have seen some customers rates rise as much as 9%.
But Cohen said that the rate increases reflect the rise in the cost of programming, particularly sports rights.
In fact, on the day the merger was announced in February, he told reporters that "we're certainly not promising that consumer bills will down or increase less rapidly." His statement to the Senate Judiciary Committee does not foreclose a price increase, just that the merger of the two companies would not be responsible for driving it.
Cohen several times outlined what he said were the consumer benefits of the transaction, including upgrades in technology, increase in broadband speeds, more innovation in video platforms and access to an expanded array of on-demand programming. He said that the deal would allow Comcast to realize greater scale that will enable it to better compete with satellite, telecom and online rivals.
As he has said before, he noted that Comcast would command less than 30% of the cable market and less than 40% of the broadband market.
"Objectively, this is not a challenging transaction from an antitrust perspective," he said.
Franken was the only member of the committee to explicitly say that he was against the merger, noting that he has heard from some "100,000 consumers who oppose the deal." He has expressed opposition from the start, and has linked to a petition on his campaign website.
Although Cohen has repeatedly stressed that Comcast would not be combining with a competitor for cable or broadband in any are of the country, "what he is really saying is these companies that control many local markets want to become a larger company that controls the national market," Franken said.
Franken questioned whether a bigger Comcast would have the incentive to add more products, and cited some of its executives' bullish outlook on its revenues to Wall Street analysts given its ability to bundle services.
He even sparred with Cohen over the nature of an FCC fine imposed on Comcast for promoting its bundling packages but obscuring its availability of standalone broadband service.
Cohen said that the bundling was "an effective strategy and one that consumers like."
Franken was joined in his opposition to the merger by Gene Kimmelman, the president of media watchdog org Public Knowledge and a former antitrust official at the Justice Department. Kimmelman testified that the combined company will give Comcast "enormous power" in leverage to command favorable program carriage pricing or demand higher rates for the channels that it owns.
The Judiciary Committee has oversight over the Justice Department, which is reviewing the proposed merger, but its members do not have an up or down vote on whether it is approved. The FCC also is reviewing the combination.
Nevertheless, the scrutiny from the committee is a traditional public relations hurdle that any company faces for a major acquisition.
That was on display as Sen. Patrick Leahy (D-Vt.), the chairman of the committee, cited reports that Time Warner Cable CEO Rob Marcus and CFO Arthur Minson stood to make $80 million and $27 million, respectively, if the merger goes through.
"Do these golden parachutes help your shareholders?" Leahy asked Minson, who was testifying.
Comcast, TW Cable Execs Grilled By Skeptical Senators at Merger Hearing
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