Comcast Said to Plan Web Video Service, Merger Opponent Says
(Bloomberg) -- Comcast Corp. plans to offer Internet video programming to compete with cable TV services, undermining its argument that buying Time Warner Cable Inc. won’t reduce competition, merger opponents told California regulators.
The California Office of Ratepayer Advocates, in urging the $45.2 billion deal be rejected, cited Comcast documents it recently obtained. Asked for comment, Comcast referred to documents it filed with U.S. regulators saying it has considered and rejected such a service.
Comcast and other cable TV providers are facing competition for viewers from online video, including Netflix Inc. and Amazon.com Inc.’s Prime service. Apple Inc. and Dish Network Corp. are moving ahead with so-called skinny bundles of two dozen channels or less offered over broadband, and Time Warner Inc. has announced an online version of its HBO premium channel.
The online land rush could continue. Apple is in talks with broadcasters ABC, CBS and Fox to provide Web-based TV, according to people familiar with the effort. Comcast’s NBCUniversal isn’t part of the discussions because Apple became convinced Comcast was stringing it along while focusing on its own Web service, the Wall Street Journal reported.
Consumer Advocates
The ratepayer advocates, California’s independent consumer-advocacy office, asked the state’s Public Utilities Commission to consider the documents containing Comcast’s online video plans before voting on the merger, which may be as early as May 7. The documents were found among millions of pages submitted by the companies to U.S. regulators.
Comcast has argued that the merger won’t reduce competition because it serves different areas than Time Warner Cable.
A Comcast online video service might compete for Time Warner Cable customers in such cities as Los Angeles, the second-largest U.S. TV market, the ratepayer advocates said in a March 17 filing.
The California commission is considering whether to let the merger proceed in the state, one of several states that have regulatory reviews separate from federal agencies. If allowed to proceed, the combination of second-largest U.S. cable company Time Warner Cable and No. 1 Comcast would create a company serving 29 million residential video customers nationwide. The deal has been beset by delays and opposition from competitors and public-interest groups.
‘Potential Competitors’
Comcast says it needs to expand to compete with bigger companies such as AT&T, Apple and Google Inc. Critics say the merger would give the Philadelphia-based company too much power over what video programs consumers can see, and too great a share of U.S. broadband connections.
Finding the documents is “an important and critical development” that shows Time Warner Cable and Comcast “must be considered as direct potential, if not actual, competitors,” the Office of Ratepayer Advocates said.
Comcast asked that the documents be blocked from California’s record and said in a filing the attempt to insert “several hundred pages” of documents is “procedurally improper.” The documents in fact “directly refute” the ratepayer advocates, and show Comcast and Time Warner Cable have no plans to compete with each other, Comcast told California regulators.
A Comcast spokeswoman, Sena Fitzmaurice, referred to the company’s March 9 filing at the Federal Communications Commission that said the company has reviewed the prospects for such a service and “has consistently rejected its business viability.”
Video Marketplace
Comcast cable lines pass 34 percent of California homes and would pass 84 percent or more if the merger is approved, meaning it is “‘much more likely’’ to aggressively enter the online video marketplace without the merger, according to the ratepayer advocates’ filing.
The advocacy office found the documents while following up on a heavily redacted letter filed by Dish with the FCC on Feb. 10. The satellite-TV company, which offers an online video service, opposes the Comcast merger.
The Office of Ratepayer Advocates didn’t include the company’s documents in the public version of its filing because they remain confidential.
Comcast and Time Warner Cable in a March 5 filing told the California utilities commission it would be unprofitable to build new cable systems or to ‘‘make the major investments necessary to enter each other’s markets” as an online video distributor from beyond areas served by cable lines.
The newly discovered documents “speak for themselves -- Comcast has specific plans on how and when to enter” the online video market, the Office of Ratepayer Advocates says.
‘No Evidence’
Comcast said in its filing with the FCC that “Dish’s ‘evidence’ does not live up to its billing.”
“There is simply no evidence that Comcast and TWC were potential (or meaningful)” competitors, Comcast said.
An administrative law judge in California last month recommended the utilities commission approve the merger, and Comcast in a blog called that an “important step.”
The deal also is under review by the FCC and the Justice Department.
Comcast already sends programming over the Internet to its own subscribers through its TVEverywhere offering. Comcast has said the cost of programming could make wider entry into the online video market more expensive. The ratepayer advocates said increased scale after the merger would give Comcast a better bargaining position with programmers.
