WASHINGTON - Comcast Corp. faced a four-hour grilling on Thursday by House lawmakers over its proposed $45.2 billion acquisition of Time Warner Cable Inc., with a former U.S. Justice Department official saying the deal was anti-competitive and "very likely illegal."
The hearing by a House Judiciary subcommittee broke only once for about 10 minutes as lawmakers asked questions that ranged from cable-TV rate hikes to the city-focused Comcast dropping a popular rural cable-TV channel in Colorado and New Mexico.
Rep. Spencer Bachus (R. Ala.) lightened the mood at one point with a reference to the air-conditioner that was initially turned off.
"This is a hotter seat than normal, though it was not intended that way," said Bachus.
Comcast executive vice president David Cohen testified for the company, and his voice grew hoarse over time.
The strongest comments against the deal came from Allen P. Grunes, a former federal antitrust investigator and now a Washington attorney. He said the Clayton Antitrust Act of 1914 says a deal would be anti-competitive if it "may substantially lessen competition or tend to create a monopoly."
That was why, he said, the deal would likely be illegal.
A merged Comcast and Time Warner Cable could thwart online video competition because of its large share of the residential broadband market, Grunes said. He also expressed concerned about Comcast/Time Warner Cable's economic power in local cable-TV advertising markets and regional sports networks that could be used as leverage against pay-TV competitors.
"Nothing is lost by their combination," countered C. Scott Hemphill, a Columbia University law professor. He said the Justice Department should look into the combination but did not see the same anti-competitive issues.
Comcast argues that the deal won't eliminate any competition because Time Warner Cable and Comcast don't compete now and serve different cable-TV franchise areas. Cohen said consumers would be "the big winners in this transaction" - repeating what he said a month ago at the Senate Judiciary Committee hearing. Though Comcast's acquisition of Time Warner Cable won't bring down cable-TV bills, the combination could slow future cable-TV rate hikes, Cohen said.
Rep. Suzan DelBene (D., Wash.) asked what could be done to bring down cable-TV prices. "That's a good question, and I'm not sure I have an answer," Cohen responded.
Rep. Hakeem Jeffries (D., New York) pressed Cohen on how Comcast would balance its fiduciary duty to shareholders and deliver benefits to TV subscribers with the merger. Subscribers should look at the "value we are delivering to them," Cohen said.
Rep. Blake Farenthold (R. Texas) said, "I don't want to sound hostile to this merger." But he asked whether Comcast would distribute the Univision Spanish-language sports channel. Comcast owns Telemundo, the No. 2 Spanish TV broadcaster.
Univision, the nation's top-rated Spanish-language programmer, has warned that Comcast's acquisition of Time Warner Cable would serve 91 percent of the nation's Hispanic households and exert enormous influence in this market because of its urban clusters in New York, Los Angeles and Miami.
Comcast has not confirmed the 91 percent figure, Cohen said, but Comcast was negotiating with Univision over carriage of three Univision channels, including the sports channel.
Patrick Gottsch, founder and chairman of RFD-TV, said that Comcast/Time Warner Cable would favor Comcast-owned NBCUniversal programming and doom independent programmers such as himself.
RFD-TV lost TV distribution to nearly 400,000 TV subscribers in Colorado and 70,000 in New Mexico because of Comcast's decision to pull its distribution in those two states, Gottsch said. Those subscribers represented 43 percent of RFD-TV's distribution on the Comcast cable system.
Cohen said the decision to drop RFD-TV wasn't ordered from Philadelphia. He said Comcast subscribers who lost RFD-TV programming could switch to Dish or DirecTV.
Rep. John Conyers Jr. (D. Mich) said that there might have to be a second House hearing on the Comcast/Time Warner Cable deal, because of its complexity.
"I don't know whether this is resolvable at first blush," Conyers said.