Comcast Accuses Netflix, Discovery of Extortion

Striking Back Against Critics of Plan to Buy Time Warner Cable

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Kevin Spacey as the manipulative Frank Underwood on 'House of Cards.'
Kevin Spacey as the manipulative Frank Underwood on 'House of Cards.' Credit: Netflix
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Comcast has accused companies criticizing its $45.2 billion bid for Time Warner Cable of "extortionate" demands and cited video streamer Netflix and programmer Discovery Communications as examples.

Discovery responded that Comcast is pursuing a strategy of intimidation, and Netflix didn't immediately offer a reply today.

The comments by largest U.S. cable company Comcast, filed with U.S. regulators, were part of its defense of the deal to buy No. 2 Time Warner Cable. The proposed combination won't harm competition and the added scale will let the new company invest more in its networks, Comcast told the Federal Communications Commission in the comments filed yesterday.

The FCC and Justice Department are vetting the acquisition, proposed in February, for harms to competition or consumers. Netflix has opposed the deal unless regulators prevent Comcast from charging for the video streamer's web traffic. Discovery told the FCC the merger could result in fewer independent voices among programmers.

Discovery "is improperly using this proceeding," Comcast said in its filing. "Discovery demanded unwarranted business concessions from Comcast as a condition of Discovery's non-opposition to the transaction."

'Onerous terms'
"We stand by our concerns that Comcast could use its enhanced leverage from the proposed merger to impose onerous terms," said David Leavy, a spokesman for Discovery, which provides Discovery Channel and 12 other U.S. networks.

Mr. Leavy said in a statement Comcast has a "strategy of intimidating voices that are not fully supportive of its position."

Dish Network also has opposed the merger. The satellite-TV operator, which offers its subscribers video over internet lines that competes with some Comcast-owned programming, said the cable provider may degrade internet traffic.

Comcast said it has pledged to abide by open-internet -- or net neutrality -- rules aimed at preventing practices Dish identified.

Netflix is recycling claims that predate the merger announced in February, Comcast said.

E-mail excerpt
Comcast in the filing offered what it called an excerpt from an e-mail from Netflix Chief Executive Officer Reed Hastings, sent after an agreement for his company to pay for traffic entering Comcast's system. "We found middle ground our our issues that worked well for both of us," Mr. Hastings said, according to the Comcast filing.

Anne Marie Squeo, spokeswoman for Netflix, didn't immediately reply to an e-mail and telephone call.

Companies that asked Comcast to strike deals with the understanding they'd not oppose the merger sought concessions worth $5 billion or more, according to the filing. Comcast rejected the offers, it said.

"Many of these disappointed programmers are before the commission, seeking often the very same windfalls," Comcast said. "The commission should forcefully reject these extortionate, anti-consumer efforts."

~ Bloomberg News ~

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