Where’s Claude Rains when you need him?
Comcast’s pursuit of its $45 billion merger with Time Warner Cable has already yielded some interesting political theater as execs from the cable giant run gauntlet in Washington to secure federal approval of the deal. But the dramatic stakes were raised Wednesday morning as Comcast came out swinging against key opponents of the deal, notably Discovery Communications and Netflix.
SEE ALSO: Comcast: Discovery, Other Critics Tried ‘Extortion’ Tactics to Stay Quiet on Merger
In a conference call with reporters, Comcast public policy chief David Cohen (pictured) came across a bit like Rains’ “Casablanca” character, Capt. Renault, the gendarme who is “shocked” to learn that gambling going on in his fair city.
In this case, the dice-roll that Comcast cited is all the behind-the-scenes maneuvering that a megabucks merger sparks among competiting companies. It’s no secret that businesses will try seek any advantage or opportunity to extract a pound a flesh at a when a rival, especially one the size of Comcast, seemingly has every motivation to play nice with others while the feds are watching.
According to Comcast’s latest FCC filing, Discovery offered to keep quiet and not publicly blast the merger if Comcast was willing to renegotiate its carriage deals early on hugely generous new terms.
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The filing also contained copies of email messages from Netflix execs expressing happiness with a deal struck earlier this year to ensure that Comcast customers get optimum video quality when streaming via Netflix — at a price for Netflix. As soon as the feds began seeking public comment on the Comcast-TW Cable deal, the netcaster did an about-face and cited the need for an “interconnection” deal as a reason why Comcast should not be allowed to expand its broadband footprint with TW Cable.
SEE ALSO: Netflix Responds to Comcast: It’s ‘Extortion’ to Demand Payment for Delivering Video
Journalists and other industry observers know intuitively that this kind of horse-trading goes on, but Comcast offered a rare glimpse of just how bare-knuckle the brawling can be. During Wednesday’s call, Cohen asserted that Netflix “deliberately” took steps to adjust its streaming video traffic patterns to strain the video pipeline in order to “leverage a better business deal for itself” with Comcast.
Cohen’s frustration with the hypocracy of Big Media companies saying one thing in public and doing another in private is understandable. Especially when self-serving public comments are draped in the guise of being all about the public interest and protecting consumers.
But the forcefulness of Comcast’s response raises the question of why it went down that road. Cohen said the 1000-plus page filing — a response to nearly three month’s worth of comments sent to the FCC on the deal from all quarters –was about giving regulators the appropriate “context” for the criticism and arguments raised by other media companies. He argued that opportunistic moves like those undertaken by Discovery and Netflix are hardly in the public interest as they would only raise costs and prices in the long run had Comcast acquiesed.
Comcast’s statements brought out predictably breathless responses from Discovery, Netflix and others. But the tactic also spurred discussion about the Comcast’s strategy with the tone of the filing and the morning conference call.
From Comcast’s view, the company had an obligation to refute the arguments made by merger detractors with hard facts. To others, it felt like a case of Comcast doth protest too much, a sign that the company is concerned that the merger may be blocked or so loaded down with conditions as to make it unattractive. As Variety’s Ted Johnson reported this week, that’s a growing sentiment in D.C. circles, even as bizzers in L.A. and New York have taken the marriage of the nation’s two largest cable operators as a fait accompli.
On Wednesday’s call Cohen also sounded exasperated that the Comcast-TW Cable review had opened the door for companies and individuals to rant about issues that fall outside the scope of the proposed transaction. But as with all mergers subject to public scrutiny, there’s the reality of the deal, and there’s the back-of-the-napkin narrative that comes out of the review process.
In 2010, when Comcast went through the hurdles to buy a majority stake in NBCUniversal, the larger story was: “We’ll save NBC.” This time around, Comcast has emphasized the lack of competitive overlap with TW Cable operations and the benefits that big-ness will bring in terms of innovation and improved broadband service to millions. Clearly, this merger story needs to find a more readily accessible hero, rather than identify villains, because the third act is about to start.
