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Comcast has launched a broadside against critics of its proposed $45bn takeover of Time Warner Cable, accusing Discovery Communications of “extortionate demands” and seeking “unwarranted business concessions” as a condition of the company’s “non-opposition” to the deal.
The deal, which would combine Comcast, the largest cable operator and broadband provider in the US, with the third largest, will reshape the US media landscape if it is approved by antitrust authorities, creating a content distribution powerhouse that also owns NBCUniversal, the broadcast network and movie studio.
The deal has attracted criticism from several companies, such as Netflix, the streaming video service, and Dish, the satellite operator, which have told the Federal Communications Commission that a combined Comcast-Time Warner Cable would wield too much market power.
Discovery, the owner of channels such as TLC, Animal Planet and Eurosport, is the largest content producer and channel owner to have spoken out publicly against the deal. In a filing with the FCC this month it said a combined Comcast-Time Warner Cable would have an “enhanced position to impose prices, terms and conditions on programmers” and hold an “unfair information advantage over programmers in carriage negotiations”.
Comcast filed a lengthy response to comments about the deal with the FCC on Wednesday and saved its strongest barbs for Discovery.
It accused Discovery of seeking favourable terms with Comcast in exchange for not opposing the transaction. Such demands were “patently improper”, it said. “Discovery does not need additional regulatory help to succeed in the marketplace,” Comcast said. Discovery’s claims were “baseless and should be rejected”.
Discovery hit back in a statement, saying Comcast had chosen “not to talk about . . . what they would do post-merger to demand extreme discounts from cable programmers or block the launch of new networks and brands”.
David Leavy, Discovery’s chief communications officer, said the company stood by its concerns “that Comcast could use its enhanced leverage from the proposed merger to impose deep price reductions and onerous terms”.
“Comcast’s silence on the details of key issues like programme discounts, and instead, its continued strategy of intimidating voices that are not fully supportive of its position, is troubling.”
The FCC is wading through thousands of comments submitted in response to the Comcast-Time Warner Cable tie-up and will rule on the deal in the next few months.
Some analysts expect the FCC to seek concessions from Comcast in order to clear the deal. The company has already agreed to divest 3.9m subscribers of its cable and internet services to John Malone’s Charter Communications to ease regulatory concerns about the takeover of Time Warner Cable.
Analysts have also predicted a wave of consolidation in content production and programming if the deal is cleared.
Operators of cable channels may need to strengthen their position when negotiating with the combined Comcast-Time Warner Cable over distribution of their channels.
The recent $70bn bid by Rupert Murdoch’s 21st Century Fox for Time Warner – which is unrelated to Time Warner Cable – was a direct response to the prospect of a bigger, stronger Comcast. Mr Murdoch eventually withdrew the bid after Fox’s shares fell steeply and the Time Warner board refused to discuss his proposal.
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