July 9 (Bloomberg) -- Comcast Corp.’s purchase of Time Warner Cable Inc. “presents serious competitive concerns” and should be denied, Dish Network Corp. told U.S. regulators.
“There do not appear to be any conditions that would remedy the harms that would result from the merger,” Jeffrey Blum, senior vice president and deputy general counsel for the company said in a filing today with the Federal Communications Commission. Company executives, including Dish Chairman Charlie Ergen, met with the commission on July 7.
The FCC is considering Comcast’s $45.2 billion proposal in February to acquire Time Warner Cable. The deal would combine the two largest U.S. cable companies and give the enlarged Comcast about 30 million subscribers.
A Comcast spokeswoman, Sena Fitzmaurice, said every market the company operates in is highly competitive. “Dish has long been one of our most vigorous competitors, and unlike us has a national footprint available in tens of millions of more homes than a combined Comcast–Time Warner Cable,” she said in an e-mailed statement.
The acquisition would give Comcast a presence in 16 of the 20 largest U.S. cities. After the merger, Philadelphia-based Comcast would connect 33 percent of U.S. subscribers to broadband, or high-speed Internet service over a wire, according to figures compiled by SNL Kagan, a research firm.
A combined Comcast-Time Warner would “exercise its enormous size to leverage programming content in anti-competitive ways,” Blum said in the filing that reported on the meetings with regulators. “It will be able to extract lower prices from programmers, which, in turn, will force programmers to extract even higher rates from smaller pay-TV providers like Dish in order to compensate the programmers for lost revenue.”
The combined company would have at least three “choke points” where it can harm competing video services, including the direct connection to consumers and managed or specialized channels, Blum wrote.
“Each choke point provides the ability for the combined company to foreclose the online video offerings of its competitors,” he said.
Comcast told the FCC in April it could offer advanced video services and spread high-speed Internet service without harming competition if it’s allowed to buy Time Warner.
“Dish not wanting stronger competitors isn’t surprising and it isn’t new,” Fitzmaurice said in the statement. “Any issues regarding NBCUniversal programming and other video services, whether they be traditional or over the top are already amply covered by pre-existing FCC rules and deal conditions.”
Comcast had to agree to the conditions when the FCC and Justice Department approved its acquisition of NBCUniversal in 2011.
John Hall, a spokesman for Dish, said the company isn’t commenting beyond the filing with the commission. Susan Leepson, a spokeswoman for Time Warner, said the company had no comment on Dish’s statement.
Comcast needs size to compete with up and coming competitors like Google Inc., Comcast executive vice president David Cohen told reporters at the time. Since 2009, cable companies have lost 7.3 million subscribers while satellite-TV providers including Dish added 1.7 million, and telephone companies led by AT&T Inc. and Verizon Communications Inc. have added 6.2 million, Cohen said in a related blog post.
Dish and any other opponents of the deal will need to back up their arguments to regulators with data showing the merger is bad for the public, said Paul Gallant, managing director, Guggenheim Securities LLC.
A plan by AT&T Inc. to buy DirectTV for $48.5 billion also “presents competitive concerns,” Dish said in the FCC filing.
While the proposed deals are “not slam dunks,” the odds still favor them being approved, Gallant said in a phone interview. However, having two major deals pending, along with an FCC proposal that could affect Internet rules, creates “a relatively unique political environment” that makes everything a “little unpredictable,” he said.
(An earlier version of this story corrected the total number of Comcast markets.)
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