Stumping for regulatory approval of his company's proposed $45 billion purchase of Time Warner Cable (NYSE: TWC), Comcast (NASDAQ: CMCSA) executive VP David L. Cohen reached for a rather interesting simile: federal regulators' decision in 2005 to stop Blockbuster from acquiring Hollywood Video.
"Regulators have to assess these issues in a world where technology is changing so fast that whole industries seem to come and go in no time," Cohen told the TPI Aspen Forum on Monday, Aug. 18. (His remarks were outlined in a filing to the Securities Exchange Commission, as all Comcast public comments are in these merger-vetting times.)
"In 2005," Cohen noted, "Blockbuster looked so dominant in home video that FTC antitrust concerns barred it from acquiring a competitor Hollywood Video. Has anyone seen any Blockbusters around recently? Today, virtually the entire bricks and mortar video rental industry has all but disappeared."
Those who critique the proposed merger, Cohen said, "ignore complex but very real dynamics when they analyze the state of the market today. They too often rely on an overly simplistic and anachronistic model--where edge companies create content and services, ISPs provide pipes that bring services to consumers, and consumers sit in front of their computer and passively take them in."
Referring to the merger as the "800-pound elephant in the room" (editor's thought: that's pretty light for an elephant), Cohen took the opportunity to issue some blanket dismissals of common criticisms.
"I won't dwell on how there are no horizontal antitrust concerns here--because there's not much more to say," he said. "The two companies simply do not compete for customers in any market. I won't spend your time repeating that there are no market concentration concerns because after the merger we will remain below the 30 percent FCC ownership cap… a limit that the courts have twice ruled is too low to raise vertical issues. I also won't belabor our response to the outlandish and factually unsupported claims about our supposed post-transaction share of broadband connections across the country."
Cohen also ventured onto the subject of net neutrality, declaring Comcast's strong support for whatever rules the Federal Communications Commission ultimately adopts--so long as the structure doesn't mirror the Title II approach widely adopted in Europe.
"We firmly believe the right balance cannot be achieved by reclassifying broadband as a telecommunications service under Title II," Cohen said. "That would be bad for our industry, bad for the Internet ecosystem, and bad for our country."
- read this SEC filing
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