Executives from Comcast and Time Warner Cable came under sharp questioning Thursday from lawmakers concerned that the companies’ proposed $45 billion deal won’t help consumers very much.
Several lawmakers wondered how consumers would benefit from the deal in a House Judiciary Committee hearing. Comcast executives have said previously that consumers shouldn’t expect to see price cuts if the deal is approved by federal regulators.
“You’ve said that you don’t expect this transition to have an impact on prices,” asked Rep. Suzan DelBene (D., Wash.), who said she has heard from constituents concerned about steadily more expensive monthly cable bills. “What can be done to help lower prices?”
Comcast* Executive Vice President David Cohen said he didn’t have an answer for that question. He said the deal “has the potential to slow the increase in prices.”
Cohen said higher costs of programming, particularly sporting events, are mostly the reason for higher monthly cable bills. Those costs are passed through to subscribers even if they don’t watch many sporting events (or many of the 200+ channels they get in pay-TV bundles).
“There are enormous sports rights costs and the cost of production that are paid by large companies that own content, such as Comcast/NBCUniversal,” said Matthew Polka, president of the American Cable Association, which represents smaller cable operators. “They pay those rights and then pass those along to those customers, who are cable operators,” he said. Those operators, in turn, pass the costs along to consumers in the form of higher monthly bills.
Ironically, Comcast’s NBCUniversal unit announced yesterday that it would pay $7.75 billion to secure the rights to broadcast the Olympics through 2032.
After another lawmaker questioned what would be “the positive benefits for them in terms of price,” Cohen responded that they expected to offer “a significantly improved customer experience” for Time Warner Cable subscribers.
In a blog post Thursday, Comcast argued that Time Warner Cable subscribers would benefit from “faster Internet speeds — more programming choices — more robust Wi-Fi — and our best-in-class X1 entertainment operating system.”
Several lawmakers also raised concerns about how a deal would impact the Hispanic television market, since the combined company would operate in areas serving more than 90 percent of Hispanic households.
NBCUniversal owns the Spanish-language network Telemundo, and its competitor Univision recently came out against the deal. The company has been unable to get Comcast to carry its Univision Deportes Network, a sports channel, like other large pay-TV operators.
“One of my concerns is that I learned last week that a combined company will serve 91 percent of Hispanic households in the U.S.,” said Republican Rep. Blake Farenthold of Texas, who said he generally supported the deal. “What assurances can you give us that you won’t discriminate against non-Comcast/NBCU programming?”
Cohen dismissed those concerns, saying Comcast has a “significant commitment to carrying Hispanic programming,” and pointed out that the company currently airs 58 channels of Spanish-language programming, including eight channels from Univision.
* Comcast’s NBCUniversal unit is an investor in Re/code’s parent company Revere Digital.