UPDATE, 9:49 AM: Discovery is “a poster child for some of the inappropriate complaints” that programmers made against Comcast’s planned acquisition of Time Warner Cable, the cable colossus’ EVP David Cohen said this morning. The company held a conference call with reporters to discuss Comcast’s case for the deal, laid out in a major filing at the FCC. He reiterated the claim that Discovery and others engaged in “extortion” by demanding network carriage and contract concessions in exchange for supporting the deal. While that’s not illegal, Cohen says, “that’s not business as usual” and puts the programmers’ interest ahead of the public’s. Comcast says programmer demands would have increased consumer bills by $4 a month.
He also attacked Netflix for agreeing to a peering payment deal to improve the speed of its video transmissions, which it later challenged. The streaming company chose a congested route for its traffic, Cohen says, as part of a “strategy” to attack the peering terms and “shift backbone costs from Netflix customers to all customers.”
The Comcast exec added that the deal with TWC won’t hurt customer service. He also expects the FCC to approve the merger without “burdensome conditions.”
PREVIOUS, 6:00 AM: “Extortion” is the word Comcast uses in an extraordinary filing to the FCC, out this morning, to discredit some of the most prominent challengers of its planned acquisition of Time Warner Cable. Several critics of the deal, it says, are only opposing it “because Comcast refused to grant various self-interested requests that were made directly to Comcast soon after the Transaction was announced — almost always with an express or at least an implicit offer to support the Transaction (or stand down, at a minimum) if the requester’s demands were met.”
More broadly, it accuses Discovery, TheBlaze, Back9, RFD-TV, Veria Living, Herring Broadcasting, and Weather Nation with challenging “the reasonableness of commercially negotiated agreements.” Comcast also says that Dish Network, RCN and others merely raise concerns about how they’d be hurt by additional competition.
We’ll add responses as they come in. Comcast telegraphed in a blog post yesterday that it would come out swinging today. Here are a few of the most incendiary allegations in the document filed at the FCC’s deadline for reply briefs as regulators weigh whether to support or challenge the union of the two largest cable companies.
Demands Comcast heard included:
“… free backbone interconnection, requests for participation in advertising ‘interconnects,’ requests to share advanced advertising technology that Comcast develops, requests for wholesale service arrangements, requests to make all of Comcast’s programming agreements with every single programmer renewable on the same date, requests to renegotiation program carriage arrangements that are not due to expire, requests to expand carriage or increase fees, and many requess to agree to carry networks that do not even exist yet — or that exists but that are carried by no one.”
The potential costs of the programming demands:
“…would cost Comcast upwards of $5 billion above any reasonable estimate of what its programming costs might be over the next several years, which would translate into increased costs for Comcast customers of more than $4 per month by 2019 and in perpetuity.”
On Netflix’s claim that Comcast demanded payment to provide speedy Internet transmissions:
The charge “is plainly not transaction-specific, since it predates this proceeding by months…and mirror’s Netflix’s incessant complaints about its agreements with other ISPs….Netflix deliberately sent its traffic on routes that could not support it, and ignored other routes that could easily have handled it.” Netflix CEO Reed Hastings endorsed his company’s peering deal with Comcast before attacking it. There could be “no clearer evidence that Netflix’s expedient change of heart reflects nothing more than a base attempt to gain additional commercial advantages over Comcast through a regulatory condition that is unjustified and would be anything but ‘great’ for consumers.”
On Discovery’s opposition to the deal:
Discovery “demanded unwarranted business concessions from Comcast as a condition of Discovery’s non-opposition to the Transaction. Such extortionate demands are patently improper.”