COMPETITION IN THE VIDEO AND BROADBAND 

MARKETS: THE PROPOSED MERGER OF 

COMCAST AND TIME WARNER CABLE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 8, 2014 

Serial No. 113–94 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
COMPETITION IN THE VIDEO AND BROADBAND MARKETS: 

THE PROPOSED MERGER OF COMCAST AND TIME WARNER CABLE 
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87–799 PDF 2014

COMPETITION IN THE VIDEO AND BROADBAND 

MARKETS: THE PROPOSED MERGER OF 

COMCAST AND TIME WARNER CABLE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 8, 2014 

Serial No. 113–94 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

[Vacant] 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

SPENCER BACHUS, Alabama, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

JASON T. SMITH, Missouri 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

DANIEL FLORES, Chief Counsel 
(III) 

C O N T E N T S 

MAY 8, 2014 

Page 

OPENING STATEMENTS 

The Honorable Spencer Bachus, a Representative in Congress from the State 

of Alabama, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ........................................................................................ 1 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Tennessee, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 3 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 4 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 5 

The Honorable Blake Farenthold, a Representative in Congress from the 

State of Texas, and Vice-Chairman, Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law .......................................................................... 9 

WITNESSES 

David L. Cohen, Executive Vice President, Comcast Corporation 

Oral Testimony ..................................................................................................... 12 

Robert D. Marcus, Chairman and CEO, Time Warner Cable Inc. 

Oral Testimony ..................................................................................................... 14 

Joint Prepared Statement ................................................................................... 16 

Matthew M. Polka, President and CEO, American Cable Association 

Oral Testimony ..................................................................................................... 74 

Prepared Statement ............................................................................................. 76 

C. Scott Hemphill, Professor of Law, Columbia Law School 

Oral Testimony ..................................................................................................... 81 

Prepared Statement ............................................................................................. 83 

Allen P. Grunes, Partner, Geyergorey LLP 

Oral Testimony ..................................................................................................... 90 

Prepared Statement ............................................................................................. 95 

Patrick Gottsch, Founder and Chairman, RFD-TV 

Oral Testimony ..................................................................................................... 117 

Prepared Statement ............................................................................................. 119 

Dave Schaeffer, Chairman and CEO, Cogent Communications Group, Inc. 

Oral Testimony ..................................................................................................... 126 

Prepared Statement ............................................................................................. 128 

Craig Labovitz, Ph.D., Co-Founder and CEO, Deepfield 

Oral Testimony ..................................................................................................... 138 

Prepared Statement ............................................................................................. 140 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 6 

Material submitted by Allen P. Grunes, Partner, Geyergorey LLP .................... 91 
Page

IV 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Addendum to the Joint Prepared Statement of David L. Cohen, Executive 

Vice President, Comcast Corporation; and Robert D. Marcus, Chairman 

& Chief Executive Officer, Time Warner Cable Inc. ......................................... 189 

Material submitted by the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 241 

Material submitted by the Honorable Spencer Bachus, a Representative in 

Congress from the State of Alabama, and Chairman, Subcommittee on 

Regulatory Reform, Commercial and Antitrust Law ........................................ 243 

Material submitted by the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 259 

Letter from the Writers Guild of America, West (WGAW) .................................. 262 

Response to Questions for the Record from David L. Cohen, Executive Vice 

President, Comcast Corporation ......................................................................... 267 

Response to Questions for the Record from Robert D. Marcus, Chairman 

and CEO, Time Warner Cable Inc. ..................................................................... 319 

Response to Questions for the Record from Matthew M. Polka, President 

and CEO, American Cable Association .............................................................. 320 

Response to Questions for the Record from C. Scott Hemphill, Professor 

of Law, Columbia Law School ............................................................................. 324 

Response to Questions for the Record from Dave Schaeffer, Chairman and 

CEO, Cogent Communications Group, Inc. ........................................................ 327 
(1) 

COMPETITION IN THE VIDEO AND 

BROADBAND MARKETS: 

THE PROPOSED MERGER OF 

COMCAST AND TIME WARNER CABLE 

THURSDAY, MAY 8, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 9:34 a.m., in room 

2141, Rayburn Office Building, the Honorable Spencer Bachus 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Bachus, Goodlatte, Farenthold, Issa, 

Marino, Holding, Collins, Smith of Missouri, Johnson, Conyers, 

DelBene, Garcia, Jeffries, and Cicilline. 

Also Present: Representatives Gohmert and Jackson Lee. 

Staff present: (Majority) Anthony Grossi, Counsel; Ashley Lewis, 

Clerk; Ellen Dargie, Legislative Assistant for Rep. Issa; Jaclyn 

Louis, Legislative Director for Rep. Marino; Jon Nabavi, Legislative 

Director for Rep. Holding; Justin Sok, Legislative Assistant for 

Rep. Smith of Missouri; and (Minority) James Park, Counsel. 

Mr. BACHUS. Good morning. The Subcommittee on Regulatory 

Reform, Commercial and Antitrust Law herein will come to order. 

Without objection, the Chair is authorized to declare recesses of 

the Committee at any time. However, I do not think we anticipate 

a recess unless it goes fairly long, and then we will have one for 

everyone’s convenience. 

I now recognize myself for an opening statement. 

Today’s hearing is on the proposed merger between Comcast Corporation and Time Warner Cable. The purpose of the hearing is not 

to determine ultimately whether the merger should proceed as proposed, be modified, or denied. That responsibility lies with the 

other branches of the Federal Government, and, most particularly, 

involves the Department of Justice and the Federal Communications Commission. Rather, we are here to provide a public forum 

in which to discuss the potential benefits and harms to the American consumer and to competition that could result from a merger 

between the country’s two largest cable companies. In doing so, the 

Committee will perform an important function for the public that 

is historically provided pursuant to its antitrust jurisdiction. 
2 

The transparency of the companies in an open hearing serves a 

vital role in any evaluation of a proposed merger’s potential impact 

on consumers. One of the issues in the public examination of the 

proposed merger is how the size of the combined companies will 

impact competition and choice in the voice, video, and broadband 

markets. 

As separate entities, Comcast and Time Warner now respectively 

reach most of the country, although they do not really compete directly against each other in individual markets. If the companies 

were to combine, the joint venture would be the largest pay television provider in 37 of the top 40 viewing markets, serve nearly 

a third of all TV audiences, and provide Internet service to nearly 

40 percent of all broadband customers. 

Size alone does not necessarily do harm to competition. In fact, 

large companies use their resources every day to invest in emerging technologies and achieve efficiencies in scale. In its filing with 

FCC, which is available for public review, Comcast stated that it 

would deploy capital to enhance broadband speed, expand the diversity of its programming content, and increase the avenues over 

which consumers can access content. Size, however, can in some 

cases result in the ability to influence markets in any competitive 

manner. 

There have been cases in our country’s economic history of companies which have used their achieved dominance to exercise monopolistic powers. Various parties have raised concerns about the 

potentially negative competitive implications of this merger, and 

we will hear from some of them today. 

The purpose of my statement is not to fully lay out all the pros 

and cons of this proposed merger. That is what the hearing is for, 

to allow our witnesses to advocate. Let me conclude by saying this. 

There are those who remember when you could count the number 

of television channels you could choose on your fingers, and the 

number depended on the strength of your antenna. And you might 

recall struggling with the rabbit ears to try to improve the picture 

quality. We are long past that. 

If there is any industry in America that has had a revolution in 

the past 20 years, is the cable and video business, telecommunications business, in a broader sense. We have gone from only overthe-air broadcast television to cable and satellite, and now to mobile and Internet streaming. Consumers have multiple choices. In 

fact, there are some people who are only getting their content from 

their Internet, and there are some services and channels only 

available online. 

The structure and economics of the industry continue to rapidly 

change. So the challenge for policymakers and antitrust regulators 

is to determine how the consumer’s interest is best served in this 

evolving and exciting environment. 

Today’s hearing will give our witnesses an opportunity to share 

their perspectives and experiences to face each other and answer 

the questions of Members of the Committee. It will aid the public 

record that American consumers will be able to review, and help 

the Committee as we continue in our ongoing oversight of the antitrust laws and their application by the antitrust enforcement agencies. 
3 

With that, I look forward to the testimony of our panel, of the 

esteemed witnesses, and turn to my Ranking Member, Mr. Johnson 

of Georgia, for his opening statement. 

Mr. JOHNSON. Thank you, Mr. Chairman, and I would like to 

take a moment to thank both you and Chairman Goodlatte for your 

bipartisan approach to today’s hearing. 

This discussion today on the proposed Comcast/Time Warner 

Cable merger is a fresh opportunity for this Committee to continue 

its long history of promoting a dynamic, competitive marketplace 

and protecting the public interest through strong antitrust oversight. 

The twin objectives of antitrust law are to promote competition 

in markets and to protect the public interest. The twin objectives 

are very important. Comcast does not compete directly with Time 

Warner Cable for broadband or video subscribers. There is also 

scant evidence that this merger will substantially increase 

Comcast’s concentration in any single market. And due to the extremely costly process of building out networks within a competitor’s territory, there is little to suggest that either company had 

planned to compete directly in any local market. 

However, it is plainly clear that the proposed merger occurs at 

a time of immense disruption in the broadband and video marketplace. Through explosive growth of edge providers, like Netflix and 

Amazon, consumers have more video options. More than ever, these 

companies’ recent success in original programming also suggests 

that competition between online video distribution and linear television will continue to grow and benefit consumers through increased choice and quality in video programming is implicated, and 

I believe that it will offer more choice and more quality. 

Though still in its infancy, the broadband marketplace is also undergoing a period of staggering disruption. In 2013 alone, the fiber 

broadband marketplace grew 29 percent to 126.6 million subscribers globally, according to ABI Research. And according to findings earlier this week by Sanford Bernstein, an equities research 

firm, Google Fiber’s early success in the Kansas City market demonstrates that their fiber service could scale into 30 million homes 

over the next several years. I am encouraged by the prospect of this 

expansion, especially considering Google’s announcement earlier 

this year that it plans to roll out service in Atlanta and parts of 

Georgia’s 4th Congressional District, as well as over 30 other cities. 

Combined with similar services from AT&T and Verizon, the roll 

out of all fiber networks across the country promises more and better options for consumers online. It is my strong belief that technology is one of the most important tools for empowering all levels 

of society. We must keep an eye to protect future innovation within 

this marketplace, but also keep in mind the disruption already occurring in the video and broadband marketplace. I therefore encourage the Department of Justice and the Federal Communications Commission to keep this in mind as it considers the effects 

of the merger upon competition in the video and broadband marketplace. 

Before I yield back to the Chairman, I would note that earlier 

this week, the Wall Street Journal reported that the proposed 

merger of Comcast and Time Warner is already having a ripple ef-
4 

fect in the video and broadband marketplace. Many companies are 

already looking for new ways to compete for customers. It is my 

hope that the groundwork that we lay in today’s hearing will serve 

as a strong foundation for future hearings on competition in the 

communications, video, and broadband marketplace. And with that, 

I yield back. 

Mr. BACHUS. Thank you, Mr. Johnson. I would now like to recognize the full Committee Chairman—our Subcommittee on Regulatory Reform, Commercial and Administrative Law is a Subcommittee of the Judiciary Committee. And at this time, I recognize Chairman Bob Goodlatte of the Judiciary Committee for his 

opening statement. 

Mr. GOODLATTE. Thank you, Mr. Chairman. The cable television 

industry and the Internet have become about as American as baseball and apple pie. We watch the events of our Nation, cheer on 

our teams, follow our favorite characters, and, on occasion, glimpse 

history changing before our eyes on television. The Internet is used 

to connect family and friends, doctors to patients, teachers to students. Cable and the Internet are portals from our homes and offices to the world and are vital components of our national economy. 

Today the House Judiciary Committee will provide a public platform to discuss the proposed combination of Comcast Corporation 

and Time Warner Cable, which together provide cable and Internet 

services to a third of Americans. Given the importance of these 

services to our constituents and the economy, the transparency afforded and the record created by this proceeding is integral to the 

overall consideration of the merger. 

As we discuss the proposed merger, we should be mindful of the 

ever-evolving nature of the relevant industries. The rapid technological developments that have taken place over the last 10, 20, 

and 30 years in the cable and broadband markets have been remarkable and unpredictable. We have seen the growth of cable 

from a nascent industry that just covered a fraction of the population and only offered a few dozen channels to one that reaches 

nearly every home in the country and delivers hundreds of channels, now even in 3-D, in addition to providing voice and Internet 

services. 

Gone are the days of rushing to the living room to watch the 

news, sports, or a favorite show when it starts at 7:00, or 8:00, or 

9 p.m. Now, consumers can watch content when they want it nearly wherever they would like. These improvements have not come 

without a cost. Cable bills have risen at nearly twice the rate of 

inflation annually over the last 17 years, including a nearly 6 percent rise just this last year. Consumers, who have grown tired of 

rising cable bills, have begun cutting the cord and are looking to 

new, emerging ways to receive content. That is how the free market is supposed to operate. When costs rise, competitors emerge, 

and as they do, consumers have greater choices. 

Today’s hearing will examine whether the proposed Comcast and 

Time Warner merger would impact competition in the cable and 

broadband markets and explore whether consumers would benefit 

from the combined scale of the joint venture. Proponents of the 

merger argue that it would spur innovation, increase choices, and 
5 

improve service. Critics of the merger raise concerns regarding the 

influence of a post-merger Comcast might yield over key aspects of 

the cable and broadband markets. 

We will hear the views of both sides of this debate today and 

allow the panelists to test each other’s theories of the future of the 

industry. I look forward to hearing from today’s witnesses on this 

important issue. Thank you, Mr. Chairman, and I yield back the 

balance of my time. 

Mr. BACHUS. Thank you, Chairman Goodlatte. I would now like 

to recognize the full Committee Ranking Member, my friend, Mr. 

John Conyers of Michigan, for his opening statement. 

Mr. CONYERS. Thank you, Chairman Bachus. And to eight witnesses, when was the last time we had—well, we ran out of tables. 

I am sorry, we have only eight here today. 

We consider the proposed acquisition of these two corporations, 

and if consummated it would enable the combined entity to control 

approximately 30 percent of the national cable market and at least 

40 percent of the high speed broadband Internet market. It would 

also dominate 19 of the 20 largest geographic markets in the Nation, including the New York and Los Angeles areas where 

Comcast currently is not present. 

Currently, Comcast, in addition to its cable and Internet businesses, owns the NBC Television Network, 10 NBC-owned and operated local television stations, the Telemundo Spanish language 

broadcast network, nine cable networks, regional sports and news 

networks, and nine major metropolitan areas, and the motion picture studio, Universal. So not surprisingly, the sheer size and scope 

of the proposed merger, which would extend well beyond cable television, has raised concerns. 

Several consumer groups, including Public Knowledge, Free 

Press, the American Antitrust Institute, and Consumers Union 

have raised concerns about the proposed merger. And I ask unanimous consent, Chairman Baucus, to offer a letter from Consumers 

Union dated May 7, 2014 for the record. 

Mr. BACHUS. Without objection. 

[The information referred to follows:] 
6 
7 
8 

Mr. CONYERS. Thank you. While neither we nor the competition 

enforcement agencies should pre-judge any deal, there are a number of issues concerning competition and consumer welfare that I 

would like as many on the panel to address as possible. To begin 

with, witnesses should address whether the combined Comcast/ 

Time Warner Cable would have such market power that it could 

discriminate against rival content providers, because, according to 

critics, the merged company would have the ability and incentive 

to discriminate in favor of Comcast/Time Warner content, including 

NBC content. 

And given that the merged entity would have almost 30 million 

subscribers, being unable to distribute on Comcast’s video distribution network could potentially be fatal to non-Comcast affiliated 

programmers. Ultimately, this could give the merged entity enormous sway over the kind of content that is available to the public. 

The witnesses should also address whether the combined 

Comcast/Time Warner Cable could emerge as a gatekeeper of the 

Internet, and thereby be able to stifle competitive innovation as 

some critics have already alleged. Recently, Netflix, an online video 

distributor, signed an agreement with Comcast that would allow 

Netflix to directly access Comcast customers rather than paying 

companies to carry traffic between its service and Comcast customers. 

On the one hand, this could be seen as a simple, straightforward 

business transaction. After all, Netflix is responsible for a third of 

all United States web traffic. Paying Comcast to connect directly to 

its pipes instead of sending traffic through other companies, which 

are struggling to handle its traffic, may simply have been categorized as a smart business decision. But on the other hand, 

Netflix itself raises concerns about its agreement with Comcast, asserting that it was forced to pay Comcast for reliable delivery to 

Comcast customers. 

In opposition to the Comcast/Time Warner merger, Netflix CEO 

Reed Hastings and CFO David Wells argued that the Internet 

faces a long-term threat from the largest ISPs driving up profits for 

themselves and costs for everyone else, and that is if the Comcast/ 

Time Warner Cable merger is approved, the combined entity would 

possess even more anti-competitive leverage to charge arbitrary 

interconnection tolls for access to their customers. 

The real question, however, is not what effect the merger may 

have on Netflix per se, but on the next Netflix that might emerge 

as an alternative to Comcast video distribution business. Would a 

combined entity be able to use its potential leverage over high 

speed Internet access to stifle potential competition in this way? 

So finally I conclude on this point. To the extent that there may 

be competition concerns, I would like the witnesses that choose to 

discuss whether imposing behavioral remedies would be sufficient. 

As a condition for approval of the Comcast/NBCUniversal transaction, the FCC and the Justice Department required Comcast/ 

NBCU to take affirmative steps to foster competition, including voluntary compliance with net neutrality protections as well as steps 

to benefit the public interests. Comcast has indicated that it will 

extend the same commitments to its proposed acquisition of Time 

Warner Cable. 
9 

Additionally, Comcast has entered into an agreement with Charter Communications to sell 1.4 million subscribers and divest another 2.9 million subscribers to form a new rival cable company. 

Nevertheless, some observers are concerned that behavioral remedies imposed in the Comcast/NBCU transaction were ineffective 

and unenforceable to the extent Comcast did not abide by them. 

And accordingly, we should consider whether such commitments 

should be strengthened and made enforceable to better protect the 

public interest with respect to Comcast’s proposed acquisition of 

Time Warner Cable. I look forward to your testimony, and I thank 

the Chairman, and yield back my time. 

Mr. BACHUS. Thank you, Mr. Conyers. At this time I recognize 

the Vice-Chairman of the Subcommittee, Mr. Farenthold of Texas, 

for his opening statement. 

Mr. FARENTHOLD. Thank you very much, Mr. Chairman, and I 

will be brief. As a free market conservative, I am on the record as 

stating that I do not think government should interfere in business 

mergers to the extent they do not violate antitrust laws. And I generally support this merger and do not think it should be destroyed 

by excessive government intervention. 

However, there are some concerns that I am hoping will get 

cleared up during this hearing, the primary one being the impact 

this merger will have on how programmers, particularly independent and small programmers, are able to compete in the marketplace and gain access. We have also got issues developing about 

new ways to distribute video content that may make this moot, but 

they are probably 10 years out. You have got video on demand delivery by companies like Google, Amazon, Verizon, Microsoft, 

Yahoo, and Apple. Obviously there is a potential concern that these 

compete with video on demand services actually native to the cable 

providers. 

I am also concerned, again, as I said, about new companies and 

new programmers having access to getting on. I am concerned also 

about the percentage of the Hispanic and Spanish-language market 

that this merger would have in the overall national pricing. Even 

though Time Warner and Comcast do not compete in any markets 

to speak of, there is an overall national accepted pricing as there 

are more players in the Internet delivery game, in particular, what 

people expect to pay on a national basis is set by that. And with 

30 percent of the market, there are also concerns over data caps 

that Time Warner does not have. 

Now, that being said, I am blessed in Corpus Christie, Texas by 

living in a community that is served by two competing cable providers. The capital cost of that is high, but as we are seeing by investments in fiber by Verizon, Google, and other companies, multiple options are becoming available. It is the short-term that I am 

worried about. And I do hope that some of the witnesses will address short-term versus long-term competition and availability of 

programs. 

And finally, I do think we ought to talk a little bit to distinguish 

about what is delivered in real time and what is important to be 

delivered in real time, for instance, news and sporting events as opposed to entertainment content, which is shifting more and more 
10 

to an on-demand or a pay-per-view model for delivery, be that 

through DVRs or services like Netflix or iTunes Store and the like. 

I have been looking forward to this hearing for a long time, and 

hope we can get it all cleared up. Thank you. 

Mr. BACHUS. Thank you. We have a very distinguished panel 

today, and Mr. Conyers made a remark about the table being so 

long. And this was an attempt to balance the witnesses, and when 

we add a witness, you have to balance them on the other end. I 

hope that balance is fine. 

Our first witness is Mr. David Cohen, executive vice president of 

Comcast Corporation, where he has responsibilities that include 

corporate communications, government and regulatory, public and 

legal affairs, and community investment. I guess, in other words, 

everything. 

Prior to joining Comcast in 2002, Mr. Cohen served as a partner 

and a chairman of Ballard Spahr Andrews & Ingersoll, one of the 

100 largest law firms in the country. Prior to his time at Ballard, 

Mr. Cohen served as the chief of staff to the Honorable Ed Rendell, 

mayor of Philadelphia. Mr. Cohen received his B.A. from 

Swarthmore College and his J.D. summa cum laude from the University of Pennsylvania Law School. Welcome, Mr. Cohen. 

Mr. COHEN. Thank you very much, Mr. Chairman. 

Mr. BACHUS. I am going to actually introduce all the witnesses, 

and I should have told the panel that. 

Mr. COHEN. Okay. 

Mr. BACHUS. And then we will go back. 

Mr. COHEN. Sorry. 

Mr. BACHUS. Our second witness is Mr. Robert Marcus, chairman 

and CEO of Time Warner Cable. Mr. Marcus is, as I said, chairman and CEO, and he has served in that capacity since January 

1st of this year. Mr. Marcus first joined Time Warner in 2005, and 

since that time he has served the company in various capacities, 

including president, chief operating officer, chief financial officer, 

and senior executive vice president. 

Prior to joining Time Warner Cable, he held various positions at 

Time Warner, Inc., including senior vice president of mergers and 

acquisitions. Before joining Time Warner, Mr. Marcus practiced 

law at Paul, Weiss. 

Mr. Marcus received his B.A. magna cum laude from Brown University and his J.D. from Columbia Law School, where he was a 

Harlan Fiske Stone scholar and editor of the Columbia Law Review. We welcome you, Mr. Marcus. 

Our next witness, Mr. Matthew Polka, is president and CEO of 

the American Cable Association, an 850-member non-profit association, whose members serve nearly 7 million cable television subscribers, primarily in small, rural markets. Prior to joining the association, Mr. Polka was the vice president and general counsel of 

Pittsburgh-based Star Cable Associates. 

Mr. Polka graduated from West Virginia University magna cum 

laude, and received his J.D. from Pittsburgh University School of 

Law where he was editor of the law school news magazine and recipient of the law school’s Most Distinguished Graduate Award. 

Welcome to you, Mr. Polka. 
11 

Our next witness, Professor Scott Hemphill of Columbia Law 

School, is a law professor at Columbia, as I said, where his research examines the balance between innovation and competition 

set by antitrust law, intellectual property, and other forms of regulation. 

From 2011 to 2012, Professor Hemphill served as chief of the 

Antitrust Bureau in the Office of the New York State Attorney 

General. Before joining Columbia’s faculty, he served as a law clerk 

for Judge Richard Posner on the U.S. Court of Appeals for the 7th 

Circuit, and to Justice Scalia on the United States Supreme Court. 

Professor Hemphill is a graduate of Harvard College and the 

London School of Economics, where he studied as a Fulbright 

Scholar. He received his J.D. and Ph.D. from Stanford University. 

So we welcome you, Professor. 

Our next witness is Mr. Allen Grunes, antitrust lawyer at the 

law firm of GeyerGorey. Mr. Grunes advised on mergers and acquisitions, provides counsel on non-merger matters, and represents clients before the courts, antitrust agencies, and Congress. 

Prior to joining the law firm, Mr. Grunes spent more than a decade at the United States Department of Justice Antitrust Division 

where he led many merger and civil non-merger investigations in 

a number of industries, including radio, television, newspapers, and 

motion pictures. 

Mr. Grunes received his B.A. from Dartmouth College and received his J.D. from Rutgers Camden School of Law, and holds an 

L.L.M. from New York University. 

Our next witness is Mr. Patrick Gottsch. He is founder and 

chairman of Rural Media Group, Inc., the world’s leading provider 

of multimedia content dedicated to a rural and western lifestyle. In 

fact, he does not wear a tie, and his representative asked me if he 

should wear a tie. And I told him that we wanted him in his natural state. [Laughter.] 

And so, if you are saying he does not have a tie on, it is the prerogative of the Chairman and of Mr. Gottsch. 

Mr. GOTTSCH. Thank you. 

Mr. BACHUS. Rural Media Group is the parent company of a 

number of multimedia companies, including RFD-TV, the Nation’s 

first 24-hour television network dedicated to serving the needs and 

interests of rural America. 

Before launching Rural Media Group, Mr. Gottsch served as director of sales for Superior Livestock Auction, the largest livestock 

auction enterprise in the United States. Prior to joining Superior 

Livestock, Mr. Gottsch started ET Installations in Nebraska, which 

introduced over 2,000 satellites to the Midwest, and was recognized 

as the Nation’s largest privately-owned home satellite retailer in 

1987. Before ET Installations, Mr. Gottsch worked on the Chicago 

Mercantile Exchange as a commodities broker. 

Mr. Gottsch graduated from Sam Houston State University in 

Huntsville, Texas. We welcome you, Mr. Gottsch. 

Mr. GOTTSCH. Thank you. 

Mr. BACHUS. Our next witness is Mr. David Schaeffer. Mr. 

Schaeffer is founder and CEO of Cogent Communications, one of 

the world’s largest Internet providers. Prior to joining Cogent, Mr. 

Schaeffer successfully funded and operated six other businesses 
12 

spanning a wide array of industries, from communications to commercial real estate. Mr. Schaeffer’s diverse background and business successes have enabled him to build management teams that 

construct and operate the only facilities-based non-oversubscribed 

multi-national network of its kind. 

Mr. Schaeffer received a B.S. in physics from the University of 

Maryland where he was also a Ph.D. candidate in economics. Mr. 

Schaeffer, we welcome you. 

Our final witness is Dr. Craig Labovitz. Is that right? 

Mr. LABOVITZ. It is. 

Mr. BACHUS. All right. He is co-founder of DeepField Networks. 

He founded that in 2011 and serves as its CEO and president. Dr. 

Labovitz is a widely recognized expert on Internet infrastructure, 

security, and cyber threats. 

Prior to founding DeepField, he served as chief scientist for 

Arbor Networks based in Ann Arbor, Michigan. His research and 

work is used by over 400 Internet service providers, and more than 

70 percent of the Internet backbone transit traffic is protected by 

products stemming from his research. 

Dr. Labovitz also served as one of the original engineers for the 

NSF Net Backbone, which is where the Internet as we know it 

today originated. And that was one of the six universities or what 

was that—— 

Mr. LABOVITZ. It was. 

Mr. BACHUS. All right. Dr. Labovitz received his master’s of 

science of engineering and Ph.D. from the University of Michigan 

and his bachelor of science in engineering from the University of 

Pennsylvania. So we welcome you as our final witness. 

And at this time, Mr. Cohen, we welcome your testimony. And 

let me say this. Each of the witnesses’ written testimony will be entered into the record in its entirety. And I ask that each of you try 

to summarize your testimony in 5 minutes. There will be some 

lights to guide you, but there is no electrical shock if you go past 

that time. [Laughter.] 

So do not take that as a traffic light red. Mr. Cohen? 

TESTIMONY OF DAVID L. COHEN, 

EXECUTIVE VICE PRESIDENT, COMCAST CORPORATION 

Mr. COHEN. We will try this again, and thank you, Chairman 

Goodlatte, Chairman Baucus, Ranking Members Conyers and 

Johnson, and Subcommittee Members. We appreciate the opportunity to discuss the substantial consumer and public interest benefits that will arise from our merger with Time Warner Cable. 

Over the last 50 years, Comcast has grown from a small cable 

operator with 1,200 customers in Tupelo, Mississippi into one of 

the most innovative media and technology companies in America. 

We are truly an American success story. 

In a nutshell, this transaction will give us the scale to invest 

more in innovation and infrastructure so we can compete more effectively with our mostly larger national and global competitors, including the Bells, DirecTV, DISH, Apple, and Google to name a few 

as were referenced in some of your opening statements. And when 

we invest, so do our competitors. AT&T, for instance, has said that 
13 

this transaction puts a heightened sense of urgency on competitors 

to invest more in their networks and improve service. 

And the ultimate beneficiary of this enhanced competition and 

greater investment is the American consumer. Specifically, 

Comcast will bring Time Warner Cable residential customers faster 

Internet speeds, more programming choices, more robust Wi-Fi, 

and our best in class X1 operating system. And business customers 

will benefit as well. 

We will also expand our acclaimed Internet essentials program, 

which has already connected over 1.2 million low income Americans to the Internet more than any program of its kind in the Nation. And we will extend many other public interest benefits from 

the NBCUniversal transaction to the Time Warner Cable footprint, 

including our commitments to diversity and to an open Internet. 

More investment, faster speeds, better technology, more Americans 

connected. Even with these compelling benefits, we recognize that 

questions arise whenever two big companies combine. Let me address some of them very briefly. 

Americans are benefitting today from robust competition. 97 percent of the homes in America are in census tracts where at least 

three competitors offer fixed or mobile broadband Internet services. 

And almost 99 percent of American homes have access to at least 

three multi-channel video providers. 

Objectively, this transaction is very straightforward from an 

antitrust perspective. As Ranking Member Johnson said, our two 

companies do not compete for customers anywhere. It is a fact that 

every customer will have the same choices among broadband and 

video providers after this transaction as before. Nor will Comcast 

gain undue power over programmers. Last week, we announced a 

transaction with Charter to divest almost 4 million customers, 

thereby reducing the number of our customers to approximately 29 

million, below a 30 percent share of multi-channel video subscribers. 

Some history here. The FCC has twice concluded that a 30 percent ownership cap was justified to prevent a single cable operator 

from wielding undue control over programmers. But the Federal 

courts twice rejected that cap saying that no cable operator could 

exercise market power at 30 percent. Nevertheless, we will remain 

below that level, which, by the way, is essentially the same share 

of the market we had after our AT&T Broadband and Adelphia 

transactions in the first decade of the 21st century. 

Comcast is a company that keeps its promises and plays fair. 

Since our NBCUniversal transaction, we have successfully negotiated dozens of agreements with MVPDs for carriage of 

NBCUniversal content without any withholding of content from 

consumers, and no arbitrations have been needed under the MVPD 

provisions of the NBCUniversal order. 

We also play fair in the exchange of Internet traffic, or what is 

sometimes called interconnection. This market is distinct from the 

ISP market, and the two markets should not be analytically 

conflated as some will try to do. For 20 years, we have successfully 

negotiated very common business arrangements with thousands of 

companies that connect to our network, including direct connection 
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agreements with content providers, such as Netflix. Other ISPs do 

the exact same thing. 

The interconnection market is fiercely competitive with dozens of 

substantial players, evidenced by the fact that prices have plummeted in that market by 99 percent over the last 15 years. Nothing 

in this transaction will affect the competitiveness of that market. 

Comcast wants to bring more investment and technology and new 

services to more American homes and businesses. In doing so, we 

will incentivize our competitors to invest more, which will benefit 

still more consumers. We have a track record as a fair competitor 

and as a company that over delivers on its promises. 

Thank you very much for the opportunity to appear here today. 

Mr. BACHUS. Thank you, Mr. Cohen. 

And at this time, Mr. Marcus, you are recognized. 

TESTIMONY OF ROBERT D. MARCUS, CHAIRMAN AND CEO, 

TIME WARNER CABLE INC. 

Mr. MARCUS. Thank you. Chairman Goodlatte, Ranking Member 

Conyers, Chairman Bachus, Ranking Member Johnson, and Members of the Committee, I appreciate the opportunity to testify today 

about the proposed transaction between Comcast and Time Warner 

Cable. 

I agree with David’s assessment that the combination of our two 

companies will create a dynamic company poised for the 21st century, bringing new choices to consumers and spurring competition 

in the marketplace. This transaction will give the combined companies greater scale, which will drive investment in R&D, infrastructure, software, and talent, investment that will bring more consumers next generation technologies, more secure and reliable networks, faster broadband speeds, and enhanced video and voice 

services. 

The combination of Comcast and Time Warner Cable also will 

bring new competition to business customers that neither company 

could effectively serve on its own. Not only will the merger drive 

investment and innovation at the new Comcast, but it will also 

drive investment and innovation from our competitors. Consumers 

clearly will be the beneficiaries. 

And as David explained, this transaction will achieve these benefits without reducing competition in any way because Comcast and 

Time Warner Cable serve distinct geographic areas. To be clear, 

consumers will have the same choices of providers after the transaction as before. 

The video broadband and voice businesses have never been more 

competitive. Today in nearly every market, consumers have at least 

three, and in many cases four or more, choices of facilities-based 

video providers. For years now, the satellite providers, DirecTV and 

DISH, have had video nationwide. Verizon and AT&T now offer 

video in a significant portion of our footprint. Google has launched 

video in several markets and has announced plans to expand that 

offering, and smaller over-builders also offer competing facilitiesbased video services. 
15 

At the same time, there are an increasing number of national 

over-the-top providers, including Netflix, which now has over 33 

million customers in the U.S., and Google video websites, which attract over 157 million unique visitors each month. 

Especially because of this increased competition among video distributors, programmers, including smaller, independent programmers, have more options for reaching consumers than ever before. 

Time Warner Cable and Comcast both carry scores of independent 

programming networks, and I am confident that the combined company will continue to be a leading platform for such content. 

As for larger programmers, their ability to impose significant 

price increases every year demonstrates their extraordinary bargaining leverage. Programming costs at Time Warner Cable per 

subscriber will rise 10 percent this year, and I have no doubt that 

large programmers will continue to negotiate from a position of 

strength after our transaction. 

Like video, the broadband marketplace is incredibly dynamic 

with cable facing competition from large broadband providers, such 

as AT&T and Verizon, rapidly expanding services from Google 

fiber, and increasingly robust mobile wireless broadband services. 

In fact, recent announcements by both AT&T and Google underscore how quickly this marketplace is evolving. 

Just last month, AT&T named 100 candidate cities for 

broadband speeds of up to 1 gigabit per second. In February, 

Google stated that it has targeted an additional 34 cities for its 1 

gig broadband service. 

I would also note that mobile wireless is rapidly becoming a viable alternative to cable broadband given the ever-increasing capabilities of LTE, as well as continued advances in compression technology. The market for voice is also flush with competition with 

landline, mobile, and a growing number of over-the-top services, 

such as Skype. As relatively new entrants into the voice business, 

Comcast and Time Warner Cable have contributed meaningfully to 

the competitive of this market, and will continue to do so as a combined company. 

This transaction will also create new and enhanced competition 

in the business market. Commercial services traditionally have 

been dominated by incumbents such as AT&T and Verizon, which 

leveraged their scale and scope to provide end-to-end services that 

businesses increasingly demand. Time Warner Cable has gained a 

foothold, especially with small- and medium-sized businesses. However, our ability to compete effectively in the telco-dominated business of serving larger multi-regional businesses has been constrained by our limited geographic footprint. 

This transaction will significantly boost competition for commercial services by giving the combined company greater scale, a 

broader geographic footprint, and efficiencies necessary to meet the 

needs of business customers, especially the super-regional enterprises that demand a broad network footprint. 

So in summary, today’s dynamic and ever-evolving marketplace 

presents both new challenges and new opportunities. Enabling the 

new Comcast to compete with greater scale will yield more robust 

competition and significant benefits for consumers and businesses. 
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Thank you again for the opportunity to testify today, and I look 

forward to your questions. 

[The joint prepared statement of Mr. Cohen and Mr. Marcus follows:] 
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Mr. BACHUS. Thank you, Mr. Marcus. And, Mr. Polka, before you 

testify, let me say this. The heat was on in here when I arrived, 

and I have asked them to turn on the air conditioner, which I understand has now kicked on. But if any of the witnesses or audience, particularly if you have completed your testimony and you 

want to slip off your coat, or prior to giving your testimony you 

want to take off your coat, you may save yourself a lot of shine 

when you give your testimony. [Laughter.] 

So I would invite and encourage anyone who wants to do that to 

do that. 

Mr. COHEN. Thank you, Mr. Chairman. 

Mr. BACHUS. You all look great, but as this wears on—— 

Mr. COHEN. Thank you, Mr. Chairman. We certainly appreciate 

you bringing to life the analogy of being on the hot seat. 

Mr. BACHUS. That is right. And this is a hotter hot seat than 

normal, and was not intended that way. I think Mr. Issa sometimes does turn up the heat, but we do not do that on this Committee. [Laughter.] 

Mr. Polka, you are recognized at this time. 

Mr. POLKA. Thank you, sir. Thank you very much. 

Mr. BACHUS. But it is not stress. It is not stress. 

TESTIMONY OF MATTHEW M. POLKA, PRESIDENT AND CEO, 

AMERICAN CABLE ASSOCIATION 

Mr. POLKA. Thank you, sir. The proposed combination of Comcast 

and Time Warner Cable with later divestitures and swaps with 

Charter is a big deal that threatens consumers and competition. 

The singular point that I want you to know is that this is a complicated deal that will negatively impact your constituents. Unless 

the FCC and Department of Justice adopt robust relief, it should 

not be approved. 

To begin with, it is important to realize that Comcast is more 

than just the largest pay TV provider. It is also a very large programmer through its ownership of the NBC Television Network, 10 

NBC-owned and operated stations, 13 regional sports networks, 

and many popular national cable networks. Like Comcast, Time 

Warner Cable is also a very large cable operator, and also a large 

programmer through its ownership and/or control of 16 regional 

sports networks, including those in New York and Los Angeles. 

I wish I could simplify this deal into a single component, but the 

fact is that there are three separate elements to consider that each 

causes harm. First, the combination of the two companies’ programming; second, the combination of Comcast programming with 

the new cable systems Comcast acquires; third, the combination of 

the companies’ cable systems. The first two are similar to ACA’s 

concerns about the Comcast/NBCUniversal transaction that DoJ 

and FCC addressed through conditions. The third raises new and 

significant concerns not present in Comcast’s previous deal. 

Regarding the first component, by merging its programming with 

Time Warner Cable’s regional sports networks and selling them in 

a bundle, Comcast will gain greater bargaining power against all 

pay TV providers in all regions where Time Warner Cable’s regional sports networks are carried. It will be severe in New York 

and Los Angeles where there is both an owned NBC television sta-
75 

tion and a must-have Time Warner Cable regional sports network. 

All pay TV providers and their consumers in these markets will be 

affected by this harm, including many ACA members. 

With respect to the second component, Comcast will have an incentive to disadvantage pay TV providers that compete directly 

with the cable systems it acquires. It will do this by either withholding Comcast programming during negotiation impasses or by 

demanding higher prices for this programming. However, the competitive harm will not be limited to Comcast’s pay TV rivals. Because many of these pay TV providers obtain their programming 

through the National Cable Television Cooperative, NCTC, 

Comcast/Time Warner Cable will have an incentive to charge the 

NCTC higher prices for its programming, and this will harm the 

900 pay TV providers that obtain Comcast/Time Warner Cable 

through the buying group. 

Regarding the third component, Comcast denies harm arising 

from combining its distribution assets with the Time Warner Cable 

and Charter cable systems it is acquiring because it does not compete locally against them. However, this ignores that this massive 

combination will dramatically increase the merged entity’s bargaining power over video programmers. 

The merged entity will have about 30 percent of all pay TV subscribers nationally. This level of market share has traditionally 

raised concerns with Federal antitrust authorities. It will also have 

greater regional market share because of the Comcast-Charter 

deal. As a result, it will become a must-have distribution outlet for 

national and many regional programmers. In the short run, it will 

demand even larger volume discounts than its rival, thereby weakening these rivals’ competitive position or worse. And in the long 

run, Comcast/Time Warner Cable may leverage its pay TV industry 

dominance to increase its market share in the video programming 

industry, ultimately reducing this industry’s competitiveness, too. 

The final result: higher prices and fewer choices for consumers. 

The FCC adopted arbitration conditions designed to ameliorate 

the first two harms described above in the Comcast/NBCUniversal 

order. However, requiring Comcast/Time Warner Cable to abide by 

these same conditions is insufficient because they are flawed. In 

particular, arbitration remains too expensive for smaller pay TV 

providers. Moreover, the conditions incompletely described how 

bargaining agents for smaller pay TV providers could avail themselves of the arbitration conditions. 

Lastly, the Department of Justice and FCC will need to fashion 

new remedies for the harm arising from combining Comcast distribution assets with distribution assets of Time Warner Cable and 

Charter which did not arise in the Comcast/NBCU transaction. 

In conclusion, the DoJ and FCC have some big decisions ahead. 

ACA looks forward to working closely with Congress and the agencies as the review proceeds and conditions are fashioned to address 

the transactions anti-competitive harms. Thank you very much. 

[The prepared statement of Mr. Polka follows:] 
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Mr. BACHUS. Thank you, Mr. Polka. 

And at this time, Mr. Hemphill, you are recognized—or Professor 

Hemphill—for your opening statement. 

TESTIMONY OF C. SCOTT HEMPHILL, PROFESSOR OF LAW, 

COLUMBIA LAW SCHOOL 

Mr. HEMPHILL. Thank you. Mr. Chairman, Ranking Member, and 

Members of the Subcommittee, thank you for the opportunity to 

testify today about the antitrust implications of this proposed 

merger. As several Members have already noted, antitrust protects 

dynamic and competitive markets, and a number of antitrust concerns have been raised out this merger. These concerns, however, 

are generally based on mistaken analogies that do not really apply. 

For example, critics have charged that this merger is just like 

AT&T-Mobile, and, therefore, it can be expected to raise prices to 

consumers, but, in fact, this merger is nothing like that. You have 

heard this already, but I think it bears emphasis. To see why, suppose I want to buy a wireless service where I live in New York 

City. I can choose from AT&T, T-Mobile, and other providers. Take 

one of these away, though, and the remaining firms may be able 

to raise prices, which has the bad effect of squeezing some consumers out of the market. 

Now, compare that to the video service. Where I live in West Village, I can choose among Time Warner and other options, but 

Comcast is not a choice unless I am willing to move to Philadelphia, which I currently am not. In fact, Time Warner and Comcast 

do not really compete anywhere for cable customers, so nothing is 

lost by their combination. 

Now, critics offer a second analogy that Comcast is sort of like 

a powerful grain buyer acting in a predatory way against farmers. 

Now, in an agricultural market, farmers might well find themselves at the whim of, let us say, the only two grain buyers in 

town. And if the two buyers merge, they have an opportunity to reduce purchases in order to depress the price. But again, this merger is nothing like that. 

In fact, programmers, companies like ESPN, are nothing like 

farmers. When ESPN sells programming to Comcast, nothing is 

used up. ESPN is free to sell the same programming to other video 

providers, too, and, of course, it does so to DirecTV, FiOS, and on 

and on. Put differently, when there is no rivalry in the use of the 

product, this whole buyer strategy, the strategy of cutting back on 

purchases in order to force a price drop, just collapses. 

Now, there is another argument here, which is that Comcast 

might be able to strike a better bargain thanks to its increased 

size. Now, that is far from clear. To be sure, the stakes are higher 

for ESPN compared to today because ESPN loses more revenue if 

its contract negotiations within Comcast break down, but that is 

true for Comcast, too. The stakes are higher for Comcast as well 

as more customers complain or cancel their service. Nor is Comcast 

such a must-have with programmers that it gains special power 

that way. 

The third analogy is that Comcast is just like Microsoft. Now, the 

idea here is that Netflix and other online video providers will be 

undermined, foreclosing their ability to compete with traditional 
82 

video. Now, this deserves careful attention because I think we can 

all agree that preserving innovation and competition from online 

video is very important. 

But this third analogy seems wrong to me as well. For one thing, 

the cost of foreclosure strategies is quite high, and there are existing protections under the earlier NBCU merger conditions for online video that would actually be extended to Time Warner which 

could be thought of as a benefit of the deal. 

What I do think we see here is not so much foreclosure, but an 

ongoing fight among powerful firms, an ongoing fight to figure out 

who should pay for the infrastructure that makes possible the dramatic growth in online video and how those payments should be 

achieved. 

Thank you again for the opportunity to address these issues, and 

I look forward to your questions. 

[The prepared statement of Mr. Hemphill follows:] 
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Mr. BACHUS. Thank you, Professor. 

And at this time, Mr. Grunes, we invite you to testify. 

TESTIMONY OF ALLEN P. GRUNES, 

PARTNER, GEYERGOREY LLP 

Mr. GRUNES. Thank you, Chairman and Vice Chairman, and 

Chairman—Ranking Member—sorry—of the full Committee, and 

Ranking Member of the Subcommittee, and Committee Members. 

I am very happy to be here. I have practiced antitrust law for 

about 25 years, and about half of that time I was with the antitrust 

division. 

Now, Comcast and Time Warner Cable say they do not compete 

for subscribers, and you have heard that this morning. But the fact 

is that Comcast and Time Warner Cable do compete. That is what 

Brian Roberts, the Comcast CEO, told the Senate Judiciary Committee in Comcast’s last mega merger with NBCUniversal. And Mr. 

Roberts was right. The two companies compete in a number of 

ways. For instance, they compete to carry local and regional sports 

teams, and they compete for advertising dollars. 

Mr. Chairman, to help illustrate how sports programming in particular would be abused post-merger, I would ask unanimous consent to submit for the record an article by former Bush Administration official, Brad Blakeman. The article explains in detail the impact of the merger on sports and sports fans, and it is highly relevant here. 

Mr. BACHUS. And without objection, all the witnesses can introduce any extraneous materials or records into the record. 

[The information referred to follows:] 
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Mr. GRUNES. Thank you, Mr. Chairman. And as for cable advertisers, they will have less choices if this merger goes through, including smaller local advertisers in your districts who may get shut 

out entirely. 

Now, Comcast says that people have a multitude of choices for 

how they get broadband. You have heard that here today. But at 

an investment conference in 2011, Mr. Roberts said that Comcast 

had only one broadband competitor. He was talking about FiOS, 

which was and still is in only about 15 percent of Comcast’s territories. 

This merger is very likely illegal. The parties know it. That is 

why they are here talking about how they plan to fix it. But I am 

here to tell you what they will not, why it is illegal, and why the 

fix does not cut it. This time it is different. 

Let us talk about video first since I think that is the easiest. 

They want to put together Comcast content with Time Warner Cable’s wires. The antitrust theory is that after the merger, the company would have both the ability and the incentive to withhold 

NBC and sports programming from rivals, such as the satellite 

companies, the telcos, other cable systems, that would drive up 

their competitors’ costs, and make them less competitive. That is 

called input foreclosure in antitrust jargon. Is it a radical theory? 

No. It is right out of the Comcast/NBCU complaint that the Antitrust Division filed in 2011. But this time, it is worse. 

Now, let us talk about the even more serious issue of broadband. 

Comcast and Time Warner Cable shares of the broadband markets 

are much higher. We have not heard the witnesses talk about what 

those shares are, but by some estimates they are 50 percent or 

even more. 

So what is the problem? Simple: online video distributors like 

Netflix, according to the Antitrust Division, are likely to be the best 

hope for additional video programming competition in Comcast and 

Time Warner Cable’s territories. If Comcast can get a hold of about 

50 percent of broadband subscribers through this merger, it puts 

itself into a position to influence how this new form of competition 

will play out. 

The antitrust theory here is called ‘‘customer foreclosure.’’ You 

had input foreclosure. This is customer foreclosure. Keep innovative competitors from being able to connect with their audience or 

charge them so their costs go up. Again, this is not a radical theory. It was mentioned as a concern in the 2011 Comcast/NBCU 

complaint. It is very similar to a theory that the Division, the Antitrust Division, actually litigated and won in the D.C. Circuit in the 

Microsoft case. The same analysis has been applied in other cases 

where the Internet is threatening an old business model. The key 

point is that a legitimate role of antitrust is to keep the pathways 

for innovation open. There is also a buyer power theory, which is 

discussed in my written testimony. 

Finally, a word about remedies. If, as I believe, the merger is 

anti-competitive, the best remedy is simply to say no. Behavioral 

remedies do not work well. In fact, Professor John Kwoka, who 

studied empirically how well they work, said they are disastrous on 

the whole. They do not prevent prices from going up. Partial 

divestitures, such as shedding subscribers, also often fail. In this 
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case, where Comcast would pick up New York, and LA, and other 

markets, it is likely to try to keep the most profitable subscribers 

and the most profitable markets and divest the others. That will 

not restore lost competition. 

And I am happy to answer any questions. Thank you. 

[The prepared statement of Mr. Grunes follows:] 
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Mr. BACHUS. Thank you, Mr. Grunes. 

And at this time, Mr. Gottsch, you are recognized. 

TESTIMONY OF PATRICK GOTTSCH, 

FOUNDER AND CHAIRMAN, RFD-TV 

Mr. GOTTSCH. Thank you. Good morning, Chairman Bachus, 

Ranking Member Johnson, and Members of the Subcommittee. My 

name is Patrick Gottsch. I along with my daughters, Raquel and 

Gatsby, who I am proud to say are sitting right behind me today, 

represent the founders and majority shareholders of Real Media 

Group, owners of RFD-TV, RURAL TV, FamilyNet, and RURAL 

RADIO on Sirius XM Channel 80. Thank you for the opportunity 

to testify about the importance of independent programming and 

the impact of consolidation in the cable industry from a rural perspective. 

RFT-TV is about as independent as one can get. After 8 years of 

rejection, in December of 2000, RFD-TV was finally launched as a 

public interest channel on DISH, and then added to DirecTV in 

2002, thanks to Congress and the FCC establishing Section 335 of 

the 1992 Cable Communications Act. The 146 independent program producers associated now with RMG, along with the millions 

of viewers who value the rural and agricultural news, western 

sports, and traditional family-oriented entertainment featured on 

our channels, have Congress, the FCC, and Charlie Ergen to thank 

for having the foresight to create opportunities to give independent 

channels a chance to exist and prosper. 

In 2007, RFD-TV evolved into a for-profit entity, and Rural 

Media Group was formed. Recognized now as one of America’s leading independent networks, RFD-TV was ranked most reasonably 

priced in the recent 2013 Independent Cable News Survey. Nielsen 

rated and distributed into over 40 million homes in cable and DBS, 

RFD-TV is the number one channel now for C&D County 

viewership, number one for time spent viewing, and for adults 50 

plus as a percentage of our overall audience composition. 

In 2008, RFD-TV signed an 8-year master affiliation agreement 

with Comcast. Following success in Nashville, in October of 2010, 

Comcast launched RFD-TV on all systems in Colorado, New Mexico, and Utah. RFD-TV worked closely with Comcast’s Denver office 

and invested heavily in this launch by purchasing billboards, radio 

ads, organizing radio remotes, and training Comcast telemarketers. 

The launch was a resounding success with RFD-TV generating an 

average 2.8 percent lift with connects up 15 percent on the D-1 tier 

in all these Comcast markets. Independents try harder and have 

to deliver. 

As you know, in January 2011, the Comcast/NBCUniversal merger was approved. Since then, Comcast has not launched RFD-TV 

in a single new major market and has declined to carry RFDHD 

in any of their markets, despite the provisions added to the merger 

designed to protect independents. On August 13th of this past year, 

despite strong ratings, low costs, and over the vehement objections 

from thousands of Comcast customers represented by these binders 

in front of me, we were given only a 30-day notice. Comcast 

dropped RFD-TV on all its cable systems in Colorado and New 
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Mexico. In 1 day, RFD-TV lost 470,000 homes, 43 percent of its 

very limited Comcast distribution. 

To date, RFD-TV has worked diligently to understand Comcast’s 

decision and to find a solution. The City of Pueblo, the State of Colorado, and even the Colorado governor’s office mobilized significant 

efforts to persuade Comcast to reverse its decision and return RFDTV’s popular rural and western-themed programming to these two 

States with such strong ties to the western lifestyle. 

Meetings have also been held with the regional Denver office and 

with Comcast programming executives in Philadelphia, to no avail. 

Why was RFD-TV dropped despite all this support? It is the question that everybody has, no matter who we meet with. But it seems 

to be simple. We are just a true independent. 

RFD-TV enjoys excellent relations with most all other cable operators. In fact, this past year, Charter launched RFD-TV on their 

Fort Worth system, and in October, Time Warner added RFD-TV 

to franchises in the State of Kentucky. Our concerns with Comcast 

now taking over this major western city and another rural State 

should be obvious. In addition, 30 million homes may be denied the 

choice to access this proven channel and a wall will be built between rural and urban America if Comcast does not reverse its recent behavior with RMG and RFD-TV. 

In the past, the United States Government has taken critical 

steps to ensure that rural America has a balance of services offered 

between rural and urban populations. The information super highway must go down each and every country road and provide twoway communication in order that city and country remain connected, just as it was when the 1893 Mail Communications Act led 

to the establishment of our namesake, rural free delivery, or RFDTV. 

Thank you, Mr. Chairman, for allowing me not to wear a tie, and 

I look forward to answering all your questions. 

[The prepared statement of Mr. Gottsch follows:] 
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Mr. BACHUS. Thank you very much, Mr. Gottsch. 

And at this time, Mr. Schaeffer, you are recognized for your 

opening statement. 

TESTIMONY OF DAVE SCHAEFFER, CHAIRMAN AND CEO, 

COGENT COMMUNICATIONS GROUP, INC. 

Mr. SCHAEFFER. Well, thank you, Chairman Bachus, Ranking 

Member Johnson, and the entire Committee for the opportunity to 

voice our concerns. 

This particular transaction is not about video, but rather about 

the future. It is about the Internet. You know, 15 years ago I had 

the good fortune and maybe the good luck to found a company on 

a simple principle that the Internet was going to be the only network that mattered, bandwidth was a commodity, technology would 

allow us to drive down prices forever. Those bets turned out to be 

correct. It was difficult. We went through a tough market segment, 

and we have been a good ’net citizen in helping lead that technology fight and driving down the costs of bandwidth. 

Comcast, however, has not been quite as good of a ’net citizen, 

and is actually looking to be a worse ’net citizen going forward if 

they are allowed to combine their network with that of Time Warner. So the Internet is based on the idea of free exchange of traffic. 

One of the mechanisms that traffic is exchanged is peering. So 

while Comcast signed a consent decree as part of its last merger 

with NBCUniversal and said it is not going to interfere with traffic 

inside of its network, it has actually been very clever. It interferes 

with traffic before it enters its network. 

So the Internet today has allowed 2.7 billion people wirelessly 

and another billion people wire line to connect. Over half of the 

population of the world exchanges information. The Internet is 

44,000 networks. Those networks interconnect one of two ways: 

they buy connectivity from companies such as ours, or they peer 

and they connect through those peering connections. 

Comcast does not operate a global network, in fact, should be 

buying connectivity to the global Internet, but has used its market 

scale and scope to extract an unusual concession. It wanted free 

connectivity peering to the Internet. Even though it did not operate 

a global network, it did not carry its fair load. But because it represented so many customers, backbone operators, like Cogent and 

others, agreed to peer with them. 

That was not good enough for Comcast. As Comcast’s market 

power continued to increase, as consumers had less choice, they actually started to demand payments for connectivity. A larger 

Comcast will demand even greater payments. 

Let me use an example of Netflix. Netflix is our largest customer. 

We are their primary carrier of Internet traffic. Netflix buys that 

connectivity from Cogent because we deliver the highest quality at 

the lowest price. We have dozens of competitors. We win business 

every day by competing and offering the lowest price and the highest quality. 

Netflix wanted to do business with us. They continue to be our 

largest customer, but there was a problem. We could not deliver all 

the traffic that Netflix was delivering to Comcast customers. We 

deliver no traffic to a Comcast customer that a paying Comcast 
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does not request. When we deliver that traffic, the ports, or connections, between our network and Comcast became full. We went 

back to Comcast and said could you please upgrade these connections in a normal pattern and practice that we have been doing for 

years. Even though you, Comcast, are not really qualified to be a 

global peer, we will give you free connectivity. Allow us to deliver 

the content at our expense to the customers that you are charging, 

those 20.7 million customers that you collect $30 million a day 

from. 

Comcast refused. They not only refused Cogent, they refused 

every other major backbone, and in doing so forced Netflix, an innovative company, into a corner. They forced Netflix to have to go 

and directly enter into a contract with Comcast, paying a higher 

price for a less robust product. That is not a free market. That is 

an abuse of market power. A larger and more combined company 

would have even more market power. 

So there are two parties that do not sit in front of this Committee today: tens of millions of consumers. I think this Committee 

cares about them and will protect those consumers, as well the 

FTC, the Justice Department, the FCC. But there are also entrepreneurs and innovators. We today sell service to thousands of 

edge providers. I cannot predict where the next You Tube or the 

next Netflix will come from. I can tell you, though, that their business models are highly dependent on getting inexpensive 

connectivity. And what they are not dependent on is entering into 

a bilateral agreement, paying a toll to an inefficient operator, such 

as Comcast, who has not honored the commitments that they have 

made to date. Why should you in this Committee expect them to 

honor those commitments going forward? 

Thank you very much. 

[The prepared statement of Mr. Schaeffer follows:] 
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Mr. BACHUS. Thank you, Mr. Schaeffer. 

At this time, Dr. Labovitz? 

TESTIMONY OF CRAIG LABOVITZ, Ph.D., 

CO-FOUNDER AND CEO, DEEPFIELD 

Mr. LABOVITZ. Thank you. Thank you, Mr. Chairman, Ranking 

Member Conyers, Chairman Bachus, Ranking Member Johnson, 

and Members of the Subcommittee. I am pleased to be here today 

to discuss some of the technical issues that may be relevant to your 

consideration of the proposed Comcast/Time Warner Cable merger. 

At the outset, I want you to know that Comcast and Time Warner 

Cable are two of the many companies with whom my company, 

DeepField, has commercial relationships. The views expressed in 

my testimony are my own. 

I am both an academic researcher and a commercial vendor. My 

current company, DeepField, provides network management and 

analytic solutions to a range of large content companies and consumer Internet providers. My career has included roles as the 

chairman of the Principal Internet Industry Engineering Association in North America, as well as the project director of several National Science Foundation research project studying Internet architecture. 

I received a Ph.D. in the study of Internet architecture from the 

University of Michigan in 1999. In 2010, I collaborated on the largest research study of Internet traffic to date. Earlier this year, my 

company, DeepField, along with academic and industry research 

partners, began work on a large-scale follow-up study to the 2010 

study. My testimony this morning is largely based on these research efforts. 

Ten years ago, the Internet was both much smaller and looked 

very different than it does today. Early on, almost all traffic traveled across an Internet core consisting of 10 to 12 large national 

and international Internet providers, including companies like 

AT&T and Level 3. The Internet core connected the majority of 

content providers with the many thousands of consumer access networks around the world, such as Earthlink and AOL. 

These interconnections between providers are known as peering. 

Unlike telephony, the exchange of Internet traffic has largely developed without regulation. Both today and in the early days of the 

Internet, service providers such as AT&T sometimes negotiate the 

exchange of Internet traffic with other large providers without paying for access or traffic rights. The industry calls these arrangements settlement free peering. 

Both today and in earlier Internet periods, consumers have paid 

access networks, such as AOL, and in turn those access networks 

have paid larger providers, such as AT&T, for connection to other 

access networks and large providers. The industry calls these arrangements transit peering. 

Over the last 10 years, technological advances and market forces 

have dramatically transformed the landscape of core Internet connection. These market forces include consolidation, such as the 

Google’s acquisition of YouTube, and the rapid growth in Internet 

content and advertising revenue. Our research has documented the 

accelerating impact of these market forces. Internet traffic was 
139 

once broadly distributed across thousands of companies, but by 

2009, half of all Internet traffic originated in less than 150 large 

content and content distribution companies. Today just 30 companies, including Netflix and Google, contribute on average more 

than one-half of all Internet traffic in the United States during 

prime time. 

There have also been significant changes to interconnection at 

the core of the Internet in recent years. Specifically, today there is 

much more direct interconnection between access networks, such as 

Verizon, and content providers, like Hulu and Google, than there 

were previously. The removal of transit provider ‘‘middlemen’’ is 

because content and access networks seek greater efficiencies of 

scale and economy. 

Our research has also found a significant degree of vertical integration and blurring of traditional distinction between companies, 

content providers, and they will build global backbones. Cable 

Internet service providers offer wholesale transit. And transit 

Internet providers offer content distribution and cloud hosting services. For example, Level 3 is both a large transit provider as well 

as the second largest content distribution provider. 

Finally, our ongoing work has found growing diversity and complexity in the Internet ‘‘cyber supply chain.’’ This refers to the increasingly diverse set of third party infrastructure and services 

supporting the delivery of Internet content. Websites once came 

from computers directly owned and managed by the content owners 

located in tens of thousands of enterprise machine closets and enterprise data centers around the world. Today the majority of 

Internet content leverages one or more of multiple third party content distribution services, hosting providers, exchange points or 

cloud providers, often with many diverse direct interconnections to 

networks like Comcast or Verizon. Examples of companies providing these different services are identified in my prepared statement. 

I hope my testimony and my research findings help provide the 

technical context of the increasingly complex economic and engineering issues associated with Internet content delivery and interconnection. I thank you for your time and attention. I would be 

pleased to answer any questions you may have. 

[The prepared statement of Mr. Labovitz follows:] 
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Mr. BACHUS. Thank you, Doctor. At this time, we will proceed 

under the 5-minute rule with questions. In order that each Member 

has sufficient time to ask questions of our large panel, we expect 

to have two rounds of questioning. And I will say that Members 

who are not Members of the Subcommittee but Members of the 

whole Committee, as we start that second round, I will yield my 

time to you because I am told that that is the only way that we 

can accomplish that. So, Mr. Gohmert, you have been here the entire hearing, so you will commence the second round. 

I will recognize myself for 5 minutes. Mr. Cohen, your response 

to a question by Senator Amy Klobuchar, who is my counterpart 

in the Senate, was that ‘‘We carry independent networks because 

we are always focused on the consumer. If you have compelling 

content and you can make that case that our consumers want to 

watch that content, we will carry it.’’ 

First, I would ask you if you stand by that statement. But secondly, I would just caution you what may be a consumer in Philadelphia and what may be a consumer in Coosa County, Alabama, 

which is an agricultural county, or in Colorado, is a totally different consumer. 

Mr. COHEN. So, thank you, Mr. Chairman. And the answer is I 

definitely do stand by that statement, and I completely acknowledge the second part of what you are saying. We try and assess 

what our customers want in individual local markets, so whereas 

we do centralize negotiation of content deals out of headquarters in 

Philadelphia, there is enormous input from local systems as to 

what channels and what programming their customers might want 

to say. 

And just to put flesh on the bones of this, I mean, we think we 

are, if not the most, one of the most independent programmer 

friendly distributors in the industry. We carry 160 independent 

programming networks. And in the last 3 years, we have negotiated and given expanded distribution for 120 of those networks. 

So we are a company that really does try and find the niches. Most 

of those networks may not have national distribution, but we really 

try and find the niches of programming that customers in particular markets are interested in. 

Mr. BACHUS. Thank you. Mr. Gottsch, in your experience, has 

Comcast lived up to the statement of Mr. Cohen? 

Mr. GOTTSCH. Well, of the—— 

Mr. BACHUS. Yes, there we go. 

Mr. GOTTSCH. Excuse me. The 160 programmers that Mr. Cohen 

mentioned, we are proud to be two of those programmers with our 

RFD-TV channel and our FamilyNet channel. But that has not 

been the case here in the last year and specifically since the last 

merger. 

We, in fact, as I mentioned in our statement, were taken off in 

Colorado and New Mexico. And in those States, there was not a 

rate dispute. We were under contract. We had the support of the 

City of Pueblo, the State of Colorado, and the governor’s office in 

Colorado. When it was announced that RFD-TV would be removed 

on August 13th, we had a lot of customers that were contacting us 

directly who said they could not get a hold of Comcast, or that 
146 

Comcast customer service was telling them that it was a rate dispute. 

We invited folks to write us and that we would personally deliver 

their letters and their concerns to the Denver office, which we did. 

We have seven of these binders, so over 4,000 customers were asking Comcast not to remove us, yet we still were removed in August 

of 2013. 

Mr. BACHUS. Thank you. And I would say that, you know, and 

maybe it is not just the numbers, but content. I know that with 

mergers in the radio business, Birmingham, which is an SEC football town, is getting a lot of hockey news, and we get a lot of soccer, which is growing, but most people my age do not know what 

the rules of soccer are. There is football, baseball, and basketball. 

So I would just call it a challenge, but it is a challenge that if you 

become bigger, you need to be aware of it. 

Mr. COHEN. Sir, we’re—look, I am sympathetic to this argument. 

I was actually involved at the time of this decision. And, you know, 

in a perfect world if money was not an issue and if bandwidth was 

not an issue, and in the RFD-TV case bandwidth was the much 

more substantial issue, those systems in Denver and Albuquerque 

are very bandwidth constrained, and our local teams there made a 

judgment that it was more important for us to add more high definition channels of popular programming, like the Smithsonian 

Channel and the Food Channel, that those were more valuable to 

the customers in that market. 

And it is nothing punitive against RFD-TV. We continue to carry 

RFD-TV to about 600,000 or 700,000 of our customers, including in 

Kentucky and Nashville, I mean, the markets where we first started with them. Let us always stay focused on the consumer. It is 

not that they do not have a choice. If RFD-TV is sufficiently important to them, they can switch to DISH and DirecTV and those markets, both of which carry RFD-TV. 

So we are not controlling consumer choice here. We are primarily 

an urban clustered cable company. And this content, even in Colorado, the bulk of our base is in the urban areas of Colorado, and 

we make the best judgments we can. 

Mr. BACHUS. Yes. I think that sort of encapsulates, I think, the 

fear that, you know, the rural market gets left out. And I would 

say we would be very sensitive to that because, you know, there 

are still a lot of people in rural areas. But I will let Mr. Gottsch 

respond, and then my time is up. 

Mr. GOTTSCH. Yes, just a brief reply. The curious thing here, the 

question that we cannot get answered is out of the 160 independent 

channels that Comcast carried, they appear to have taken off one 

of the most popular channels in the Colorado and New Mexico markets. Our Nielsen ratings are higher than the other 159 channels 

in many day parts and throughout the week. 

And then, again it was the support of local governments and the 

request of Colorado that if there is going to be 160 independents, 

is there not room for one independent channel devoted to rural interests, which make up 27 million homes in this country. There appears to be 11 million homes of the 29 million that Comcast is taking over and 70 million people. Just one channel devoted to rural 

America is all we are asking for. 
147 

Mr. BACHUS. Thank you. At this time, I will recognize the Ranking Member of the full Committee, Mr. Johnson, for 5 minutes. 

Mr. JOHNSON. Thank you, Mr. Chairman. The minority lead ownership in the video and broadband marketplace is good business, it 

is an important societal goal, and it helps to expand our economy. 

And that is a value that many people hold dear. 

When Comcast announced its merger with Time Warner, it stated that it anticipated that the FCC would require it to get under 

the 30 percent limit for cable TV systems. And so, there was an 

agreement that has been worked out with Charter to sell the 3.9 

million channels that, or—excuse me—subscribers that would be 

required to get under that 30 percent benchmark. 

Did Comcast, Mr. Cohen, consider doing smaller transactions 

with African-American and Hispanic companies instead of giving 

the whole 3.9 million to Charter? 

Mr. COHEN. So, Mr. Johnson, I know you are aware of our commitment as a company to minority participation and ownership as 

well as in access to minority-centric programming. And so, this was 

a significant part of our discussion and remains a significant part 

of discussion. 

The problem is that there was no way to accomplish the significant tax efficiencies and competition and public interest enhancing 

efficiencies that we have been able to generate through this threepart transaction with Charter by dividing the systems into smaller 

pieces and making them available for smaller companies, whether 

they are minority or not minority to be able to bid for them. It was 

a topic of discussion. We have had discussions with numerous minority-owned groups who are interested in purchasing cable systems. And I will report to you the same that we have reported to 

them, which is we will continue to look for opportunities to create 

minority ownership in the cable system space. 

Mr. JOHNSON. And what about enabling already-existing minority-owned providers to get larger? 

Mr. COHEN. So I am running through my mind and do not think 

it would be appropriate to disclose the various groups that we have 

talked to. I honestly am not sure whether any of them are existing 

minority owners of cable systems. But to the extent we would engage in this kind of a process, we would obviously not exclude those 

types of groups from participating. 

And if I can, Mr. Chairman, I mean, I think that I have some 

credibility speaking to this because 4 years ago when we were 

doing the NBCUniversal transaction, I talked about our company’s 

commitment to minority ownership in the cable channel space. I 

referenced TV One, which we helped to create as a cable company 

after our acquisition of AT&T Broadband, and which we continue 

to support. And it is one of the great success stories of a minorityowned channel. 

And in the NBCUniversal transaction, we committed to launch 

eight new minority-owned independent networks over an 8- to 10- 

year period. We have launched four of those already, two of them 

African-American owned and two of them owned by HispanicAmericans. So this is a space where minority ownership of businesses, wealth creation opportunities, and conversation shaping opportunities is very important to us as a company. 
148 

Mr. JOHNSON. All right, thank you. As you know, African-Americans view television programming at a more significant level than 

the general population. Yet there seems to be a disproportionately 

small amount of programming geared toward urban and AfricanAmerican audiences. On its basic cable programming tier, does 

Comcast carry any African-American controlled and operated networks? And if so, are those networks carried on the basic tier in 

every market, or only in select franchise areas? 

Mr. COHEN. So I am not sure what our basic tier is anymore, but 

I can tell you that our most popular tier is our basic digital tier. 

And on that tier we carry 11 African-American owned or targeted 

networks, which is the sum of African-American owned or operated 

networks that we know about. 

Now, I know only three of them are African-American owned— 

TV One, ASPiRE, and Revolt. We do not necessarily know whether 

these other networks are majority African-American owned, minority. But they identify themselves as African-American targeted networks, and we carry all 11 of them on our most popular digital tier. 

Mr. JOHNSON. All right, thank you. How do you respond to 

claims that Comcast/NBCU has blocked certain content providers, 

like Univision Sports, from being carried on your services, or unfairly place channels of other content providers, like Bloomberg 

News, because they compete with NBCU channels? 

Mr. COHEN. Two very different questions, but the answer would 

be the same to both, which is I would deny those charges. I think 

they are not true. In terms of the way we treated Bloomberg News, 

the irony of the Bloomberg News situation was that Bloomberg 

News was positioned in the place it was in the channel lineup before we owned CNBC, so there could not have been any discriminatory intent. 

But I do not even rely on that argument anymore. We had a dispute with Bloomberg News. It was resolved at the FCC. We have 

now repositioned Bloomberg News to news neighborhoods as they 

have requested——. 

Mr. JOHNSON. What about Univision? 

Mr. COHEN [continuing]. And we have resolved that matter entirely. 

Mr. JOHNSON. All right. Would you care to respond to the claim 

about Univision Sports? 

Mr. COHEN. I am sorry. I was worried about the time, but I am 

happy to answer that. 

Mr. FARENTHOLD [presiding]. And I was going to go there in my 

line of questioning, too. 

Mr. COHEN. I will quickly say we carry eight Univision networks. 

Univision has come to us and they have asked for additional carriage of three Univision networks, and we are under discussions 

with them. We are one of the largest, if not the largest, carrier of 

Hispanic programming—— 

Mr. JOHNSON. What about sports? 

Mr. COHEN [continuing]. Fifty-eight channels. So as a business 

matter, we will resolve our issues with Univision in due course. 

Mr. JOHNSON. All right, and I will yield back. 

Mr. FARENTHOLD. Thank you very much, Mr. Johnson. I do want 

to follow up a little bit on that, Mr. Cohen. I do want to point out, 
149 

I do not want to sound hostile to this merger because I really think 

that the government needs to stay as much out of the business 

world as possible. But I have had some concerns raised by constituents and some interest groups that I have agreed to talk to you 

guys about. And I think that is the purpose of this hearing is to 

get the stuff on the table. 

And, you know, one of my concerns is that I learned last week 

that a combined Comcast/Time Warner Cable will serve 91 percent 

of the Hispanic households in the U.S., and it will be the top distributor in 19 out of the 20 top Hispanic markets. We know that 

you guys own Telemundo, one of the current providers of Spanish 

language programming. And along with what Mr. Johnson was 

asking, what assurances can you give us that you will not discriminate against non-Comcast/NBCUniversal owned programming produced by other companies? And do you have internal procedures in 

place to prevent that kind of discrimination? 

Mr. COHEN. So I should have waited for your follow-up. I would 

have been able to give a more complete answer. So first of all, we 

have not been able to verify those numbers, just for the record. But 

I have observed before in this transaction that sometimes big is 

bad, and I understand that. But sometimes big is good, and sometimes big is very good. And when you have a company like 

Comcast, which has this extraordinary commitment to diverse programming, but, in particular, to Hispanic and Hispanic-themed 

programming, covering a greater percentage of the Hispanic population in the United States is a really good thing because we will 

bring that commitment to those communities in the same we have 

brought it to the current Comcast footprint. 

So we have a significant commitment to carrying Hispanic programming. As I said, we carry 58 Hispanic or Hispanic-themed 

cable channels currently, and we have a long-term retransmission 

consent agreement with Univision. And we carry eight Univision 

networks, so—— 

Mr. FARENTHOLD. I guess, this kind of follows up on my overall 

concern about the difficulty for new programmers to break into the 

market. Univision’s Sports Network is a perfect example. They are 

actually, I think, not on you all’s stations, but they end up the 

number one Spanish language sports, so it kind of argues against 

being good business to have it on there. You hear Mr. Gottsch here 

testify about the fact that his ratings in markets where he was removed from your cable system were higher than some of the other 

channels that you won. 

So I guess the level of vertical integration there, the fact that 

NBC owned so many stations that would potentially compete with 

these—— 

Mr. COHEN. So let me respond to that, and fortunately for us this 

is one of the most litigated issues that exists in antitrust law, and 

that is the percentage of the market that a single company can 

have before there is a risk that it can foreclose content to its consumers. Twice the FCC had extended proceedings to determine 

what was that percentage of the market. Twice they concluded that 

if one cable company had more than 30 percent of the market, 

there would be an undue risk of that company serving as a bottleneck or extorting improper pricing from channels. 
150 

Mr. FARENTHOLD. One of the—yes. 

Mr. COHEN. Twice the D.C. Circuit struck that down finding that 

there was no evidence that with a 30 percent share a cable company would be able to control the market. We are coming in below 

30 percent, and the answer to the question is that any cable channel has more than 70 percent of the country to be able to go after. 

Mr. FARENTHOLD. All right. I am running out of time. Okay, go 

ahead, but I am running out of time here. 

Mr. COHEN. One quick answer. One quick. The protection that 

exists is the program carriage rules. There are legal rules that prevent us from discriminating against a new channel or an existing 

channel in favor of content that we own. So that is something that 

already exists under the law. We are not allowed to do it. 

Mr. FARENTHOLD. One of the mitigating factors I think that is actually going to gain you support in this is as new technologies are 

developing out and you are getting more cable companies, you have 

got FiOS competing. 

Mr. COHEN. Right. 

Mr. FARENTHOLD. You have got Google Fiber coming in. There 

are going to be more options in the short term. But I am also concerned about the programming. I will use an example from Corpus 

Christie where I live. We have two cable companies. We have Time 

Warner and we have Grande. Comcast owns the rights to the 

Astros baseball games. I would assume there is not going to be a 

lot of incentive there for you to sell the rights to carry the Astros 

baseball for, you know, a few cents or a buck a subscriber to 

Grande when you can use it to bring in, you know, hundred-dollar 

Internet/cable/phone. 

How are we going to address the issue of fair access to your programs? And that could be taken to the extreme to say, all right, 

we are going to pull NBC and Bravo and E!, too, or we are going 

to jack them up to competing cable companies or FiOS in the same 

market. 

Mr. COHEN. So I smile only because I wish we had that problem 

with the Houston Regional Sports Net, and that your concern—— 

Mr. FARENTHOLD. Well, it is part of the Astros’ fault. They are 

not doing very well. 

Mr. COHEN. If you really wanted to watch the Astros, that would, 

like, be good news for that network. But the Houston RSN is a perfect example really of why the fear about our control of this is overstated. That network is really controlled by the two teams, by both 

the Astros and the Rockets. We have a minority ownership interest 

in it. We manage it, but they control the pricing of the network. 

They control the distribution of it. 

But again, even if that were not true and we were controlling 

that, that is on the program access side, so you have the program 

access rules. And I would note that under the NBCUniversal order, 

a small cable company that does not like the terms that are being 

offered actually has a right of arbitration just on that regional 

sports net without any other cable channels bundled with it. 

Mr. FARENTHOLD. Well, I have run the red light, so we will move 

along. And I will have a couple more questions in the second round 

of questioning—— 

Mr. COHEN. Thank you—— 
151 

Mr. FARENTHOLD [continuing]. For some of the other members of 

the panel. We will now go to the Ranking Member of the full Committee, the distinguished gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman, and I thank all the 

witnesses for their important contributions. I have a strong feeling 

that we may have to have another hearing on this because of the 

complexity of the material. 

I would like to start off with, well, just observing that Mr. Hemphill left out the consumer welfare is the key objective of antitrust 

law. You said the goal of antitrust is to ensure dynamic competition and open markets. But I did not hear a lot about keeping 

prices low and choices for the consumer. 

So I would like to turn to Mr. Grunes, who said that 30 percent 

of the cable market share is not enough to be anti-competitive. But 

really no court has ruled that 30 percent is, as a rule, not enough 

to be anti-competitive. And the Supreme Court has also ruled that 

30 percent of a market was a troubling trend toward concentration. 

And also, what about the 40 percent control of the broadband 

Internet? How do you see this as something that we may not overcome if this merger were to go through? 

Mr. GRUNES. Thank you, Ranking Member Conyers. Two points. 

First of all, I did not advocate 30 percent as not being a problem. 

The merging parties—— 

Mr. CONYERS. Oh, Mr. Cohen was the one that made that—— 

Mr. GRUNES. Mr. Cohen, yes. And I would point out a couple of 

things. First of all, Judge Diane Wood of the 7th Circuit, who is 

also a former Antitrust Division lawyer and a University of Chicago professor, found that 20 percent was large enough in the Toys 

R Us case depending on the markets. The issue here is not simply 

numbers. A subscriber is not a subscriber is not a subscriber. When 

you have the top 10 or top 20 markets, that gives you power in 

each of those markets, and that is the power we should be concerned about. 

In terms of the broadband shares, I am not sure whether it is 

40 percent, 50 percent. It could be as high as 60 percent. But the 

one thing I can say is that we have not heard Comcast or Time 

Warner Cable come into today and say we are going to get those 

shares down to 30 percent. They are talking about the video 

shares. They have not said a word about the broadband shares. 

Mr. CONYERS. Thank you so much. 

Mr. HEMPHILL. If I might just add to clarify, if you do not mind, 

Mr.—— 

Mr. CONYERS. Well, I do mind right now because I am under a 

very tight time limit. Maybe on the second round. 

Mr. HEMPHILL. Maybe on the second round. 

Mr. CONYERS. Let me turn now to Mr. Polka. Comcast is a cable 

company and a programmer, and that raises a double concern with 

me because of potentially higher prices and fewer choices, which is 

what we are concerned about. And I think the Department of Justice is going to take a little while sorting this out, and I do not 

know if it is resolvable to be honest with you at first blush. What 

are your cautionary comments to the Committee about this? 

Mr. POLKA. Very cautionary. As I mentioned in my opening comments, these are really three separate mergers that we are talking 
152 

about, not just a horizontal merger, because you have got the combination of programming assets of both Comcast and Time Warner 

Cable. You have got the combination of Comcast distribution and 

other programming assets that combine anti-competitively. And, 

Mr. Chairman, I would note that Grande Communications is a 

member of ours and is very concerned about the nature of this big 

deal and prices that they will be charged ultimately that their consumers will have to absorb. 

And then the ability of the large company, even though it may 

not be 30 percent of the market, to be able to control and have influence over other programmers, other large media companies that 

they deal with in terms of what prices are charged to the Comcast/ 

Time Warner Company, which ultimately affects the prices of our 

other member companies. So we are very concerned. 

Mr. CONYERS. Let me just squeeze in here to Dave Schaeffer 

going out of the door. As the Comcast market power increases, so 

can the prices that they demand. Is that a point that you made in 

your discussion? 

Mr. SCHAEFFER. Yes, sir, Mr. Conyers. In fact, we have seen 

Comcast point to the fact that they have declined Internet pricing 

by 92 percent over a 15-year period. In fact, Internet pricing at the 

core of the Internet transit has gone down 99 percent over that 

same period. So we have seen a decline of eight times as much as 

Comcast has passed on to its customers. Secondly, you know, a lot 

of the conversation here has been around video programming. 

Mr. GARCIA. I am sorry. Could you explain that? I did not understand his response just about the percentages of Internet traffic. 

Mr. CONYERS. Well, wait a minute. We—— 

Mr. GARCIA. No, I am not taking over. I just want him to explain. 

Mr. CONYERS. Yes, I know, but let him finish, and we will get 

back to you. Yes? 

VOICE. Go ahead. 

Mr. SCHAEFFER. I will try to answer that when we get there. But, 

you know, the ultimate way in which video content can be distributed to consumers is over the Internet. So today, American consumers use about 300 minutes a day per capita of video. Only 15 

minutes of that is delivered over the Internet. Over time, the cost 

of publishing that content continues to decline, and if allowed to 

operate freely, probably somewhere between 220 and 250 minutes 

a day will eventually be delivered over the Internet. 

Comcast through its interconnection strategy is deciding to limit 

the ability of over-the-top video because it directly competes with 

its linearly programmed video and gives it an additional control 

point over the production of that video. So it is another way to increase pricing. 

Mr. CONYERS. Thank you very much. And thank you, Mr. Chairman. 

Mr. FARENTHOLD. Thank you very much. We will now go the gentleman from North Carolina, Mr. Holding, for his round of questioning. 

Mr. HOLDING. Thank you, Mr. Chairman. I am sure that my constituents back at home who are Time Warner customers want to 

cut right to the chase. So, Mr. Cohen, are my constituents who are 
153 

Time Warner customers going to face higher prices for services 

post-merger? 

Mr. COHEN. So, Mr. Holding, there is nothing about this transaction that is going to lead to increased prices for consumers. I 

think there are significant consumer benefits that your constituents will see as a result of this transaction: faster Internet speeds, 

more video on demand choices, more free video on demand choices, 

the ability to watch more content on a streaming basis inside and 

outside the home, access to our X1 video platform, which is truly 

a groundbreaking new way of watching television. But there is 

nothing in this transaction that will result in an increase in prices 

for any Time Warner Cable consumer. 

Mr. HOLDING. You said in the past that ‘‘We’re certainly not 

promising that customer bills are going to go down or even increase 

less rapidly.’’ You would still stand by those comments, though? 

Mr. COHEN. What I said was, and I have a nasty little habit, 

which I hope no one wants to persuade me to stop, of telling the 

truth. So I was asked a question and I said I cannot guarantee that 

prices are going to go down, and I cannot guarantee that they are 

even going to increase at a lower rate. I think this transaction has 

the potential to slow the increase in prices because with our additional scale, our additional investment, and our ability to gain 

some purchasing advantages in the set-top box market, may be 

able to move the needle slightly on the programming side. 

What other benefits we can get as a result of the combined scale 

of the company, consumers will see in terms of impact on their 

bills. And for us, consumers are always front and center. I think 

consumers are going to be the big winners in this transaction, and 

any moderation that we can bring to increases in their bills will 

certainly be one of the benefits that we would love to be able to 

see. 

Mr. HOLDING. Mr. Schaeffer has made some fairly direct allegations, and even though the technical aspects of what Mr. Schaeffer 

is talking about are a little bit above me, I do get his point very 

clearly that the combined share of broadband and also the amount 

of share you have in top markets and so forth, you know, is powerful. So if you could take a minute and respond directly to the allegations that Mr. Schaeffer has made. 

Mr. COHEN. So thank you for that opportunity. I am going to try 

and bring this down to a level that I can understand, which really 

requires coming up a little to more of a 30,000-foot level. 

I think there are two different markets here that we need to consider. One is the broadband ISP market, what is called the last 

mile market, our delivery of broadband services to our customers. 

The second is the market in which Ms. Schaeffer and Cogent functions, which is the interconnection market, which is the first mile 

market, if you will. How Internet providers, how Google, Netflix get 

their content onto the Internet and into our ISP so that our customers can gain access to it. 

I do not believe, and I will be interested whether Professor 

Hemphill agrees with this, that the market share that we are 

achieving in the broadband ISP market, the last mile market, is 

close to the level that it has any impact whatsoever on the first 

mile market. That market is an intensely competitive market. It is 
154 

a market with dozens of network operators, content delivery networks, peering organizations, transit providers. As Mr. Schaeffer 

has described, it is a market in which he has competed vigorously 

for 15 years trying to offer the lowest price and the highest quality. 

It is a market where pricing has dropped 99 percent over the last 

15 years. 

And as a result of that, the Netflixes of the world, the Googles 

of the world, the Internet content companies, the young man working in his garage in your district who wants to be the next Netflix 

has dozens and dozens of choices as to how get his or its content 

onto the Internet to enable them to deliver it to our customers. And 

we think that market is functioning extremely well. We do not 

think that market and the structure of that market is affected at 

all as a result of this transaction, and that the questions that have 

come up recently about that market are better looked at on an industry-wide basis, which is exactly what Tom Wheeler and the 

FCC have said that they are prepared to do. 

If you gave me the invitation, one thing I also want to reply to 

his description of our Netflix transaction, which as far as I know 

is wholly inaccurate. We did not force Netflix to enter into an interconnection deal with us. That was Netflix’s idea. They came to us. 

It was their desire given the size of their traffic to cut out the middleman, their words—the middleman happened to be Cogent, by 

the way—and to deal directly with us. 

And although our agreement with Netflix is subject to a non-disclosure agreement, and I cannot disclose the terms of the agreement, which I would do willingly, by the way, with permission from 

Netflix, I can tell you that it has been publicly reported, contrary 

to what Mr. Schaeffer said, that Netflix is paying not more to us 

under this agreement, but less. And I think Netflix made a commercially reasonable decision that given the size of their traffic, 

they did not need to deal with a wholesaler. They could deal with 

us directly, and they came to us and asked us to do that deal, and 

we did. And I would note that they turned around 2 weeks ago and 

announced that they had done exactly the same type of deal with 

Verizon. 

Mr. HOLDING. Thank you, Mr. Chairman. 

Mr. FARENTHOLD. Thank you. We will now go to the gentlelady, 

who has a child at the University of Texas, so I am sure she is 

looking for the Longhorn Network on her cable service, much like 

I am. Ms. DelBene? [Laughter.] 

Ms. DELBENE. Thank you, Mr. Chair, and thanks to all of you 

for being here today. We appreciate you taking the time. You know, 

this merger obviously has the attention of many folks across the 

country, and my constituents are no different. They rely on cable 

access for TV as well as for broadband, and pricing is very, very 

important to my constituents. I hear about it from them on a regular basis, and their concerns about paying a higher price each 

year, many times beyond the rate of inflation for the same service 

they have had. And they are very concerned about the impact that 

this might have. 

Following up a little bit on Mr. Holding’s questions, Mr. Cohen, 

you have said that you do not expect this transaction to have an 

impact on prices per se. But if this is not going to have an impact 
155 

and economies of scale are not achieved to help lower prices, then 

what can be done to help lower prices for consumers? 

Mr. COHEN. I think that is a very good question, and I am not 

sure I have an answer to that. I think that when you look at the 

number one driver of cable pricing—by the way, this may come as 

a surprise. Mr. Polka has probably spoken more on this subject 

than anyone on the panel, and you might want to ask him the 

question as well. But the number one driver of cable pricing is the 

cost of programming, and the cost of programming is rooted ultimately—I think Mr. Polka would agree—in the cost of producing 

that programming and in the rights around programming, and, in 

particular, sports rights. 

So that if you look over the last decade, there has been a 120 

percent increase industry wide in the cost of cable programming. 

And yet the increase in the most common package of cable programming has risen at less than half that rate over that period of 

time. So cable operators large and small have been valiantly fighting to try and ameliorate the impacts to their consumers of the 

overall costs of programming. I am not sure what the answer is to 

being able to control the continual spiraling increases in programming and programming rights and, in particular, sports rights. But 

I think somewhere in that alchemy is the ultimate solution to at 

least moderating price adjustments. 

If I can do one other point, though, I want to say that when you 

look at what happens in the pricing of programming, the FCC statistics deal with a particular package. If you look at the cost of 

cable programming on a per channel basis, the increase has only 

been about .2 percent over the last decade where inflation has increased 2.4 percent a year over that period of time. So that is about 

one-12th of the rate of inflation. 

And if you look at promotional bundles, which is where the majority of our customers consume their content, the pricing of those 

bundles has been flat over the last 7 years. 

Ms. DELBENE. Thank you. I want to ask Mr. Polka, though, the 

same question and also since you referred to him. So, Mr. Polka, 

what is your feedback? 

Mr. POLKA. Sure. Thank you very much. David, you are correct 

that there are enormous sports rights costs as well as costs of production for programming that are paid by large companies that 

own content, such as Comcast/NBCUniversal. Large content companies, like Comcast/NBCUniversal, pay those rights, and then in 

turn pass those onto their customers who are cable operators, 

among which are the 850 members of the American Cable Association, whose median size is 1,500. 

The fact of the matter is that with that control of content, with 

the rights that these content companies have, and particularly in 

the context of this merger, there is the ability to be anti-competitive in the use of that programming. And I will give you an example. 

Our members purchase their programming through the National 

Cable Television Cooperative. It would be likely in this merger to 

see, and this is why we are asking for FCC and Department of Justice review, that Comcast/NBCUniversal as part of the larger 
156 

transaction will seek to recover its programming and its sports 

rights costs, all right? 

One way that they can do that how NBCUniversal charges 

Comcast for programming. Well, it is sort of one pocket to the 

other, so if NBCUniversal charges Comcast a higher price and that 

price then is then transferred down to the smaller providers of the 

National Cable Television are members who buy programming 

there, our prices as member companies and as competitors to both 

Comcast and Time Warner will rise, which will ultimately lead to 

rising prices to consumers. 

So we are not convinced that this merger will lead to lower prices 

for consumers. In fact, to your point about choice, there really is 

no choice today because of how programming from companies like 

Comcast, Universal, and others, how programming is sold in bundles where bundles of programming must be purchased or no programming can be purchased at all. So ultimately, unless those bundles are broken up to consumers, all they are going to see if higher 

prices. 

Ms. DELBENE. Thank you. And thank you, Mr. Chair. I yield 

back. 

Mr. FARENTHOLD. Thank you very much. I see the next one up 

is the gentleman from Virginia, the Chairman of the full Committee, Mr. Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. Let me direct my 

first question to you, Mr. Cohen. To the extent that Comcast is able 

to obtain discounts from programmers, is it likely that these programmers will seek higher payments from other video distributors 

to compensate for lost revenues? 

Mr. COHEN. So I will give a short answer to that, but might yield 

my time to Professor Hemphill who might comment more knowledgeably. I think the answer to your question is no, and the reason 

for that is that in my lay terms, if you can assume that if we got 

a bigger discount that that would cause a programmer to go to a 

smaller cable company and try and make up that discount by getting a higher rate from that programmer, that would assume that 

in its initial negotiation with a smaller programmer, it left money 

on the table. That is, that it charged them less than what they 

could otherwise get. And that now that they got less from us, they 

would have to go back and get more from the other programmer. 

And I do not think that that is the way that markets work, and 

I think the economics and antitrust law is pretty is well settled on 

that fact. 

Mr. GOODLATTE. Okay. Before we go to Professor Hemphill, if I 

have time I will do that, but I have some other questions. So next 

I am going to go to Mr. Schaeffer on the issue of in your testimony 

you argue that Comcast will be able to prevent content from reaching customers over the last mile. Do the requirements contained in 

the NBC order—in other words, when Comcast acquired NBC, particularly the open-Internet requirement—adequately address your 

concerns? 

Mr. SCHAEFFER. So while Comcast has alleged that it is abiding 

by the net neutrality rules and not discriminating against content 

flowing over its network, it has refused to upgrade its connectivity 

to all of the major backbones globally. Comcast alleges in its writ-
157 

ten testimony that the vast majority of traffic reaching its customers goes through settlement free or non-payment peering connections. But then it also says that Netflix accounts for over 30 

percent of the traffic going to its customers. So there is clearly an 

internal consistency since they are charging Netflix. They are not 

offering them a settlement free connection. 

What, in fact, Comcast has done is by refusing to upgrade those 

connections, two things. One, they have denied their customers 

who they are charging the highest quality service that they could 

possibly deliver because they know that the request bits that those 

customers send will not be answered as the bits cannot flow back 

to their network. And secondly, they have created an inferior quality of service—— 

Mr. GOODLATTE. So let me interrupt you because I do not want 

to give you the opportunity to repeat all of your testimony. My 

question was, does the NBC order, particularly the open Internet 

requirements, adequately address your concerns, yes or no? 

Mr. SCHAEFFER. No. 

Mr. GOODLATTE. Okay. Next, let me turn to Mr. Polka and ask 

you, does the Comcast merger impact the cable hardware and software industry? In other words, does this transaction make the 

Comcast standard the industry standard, and does that have an 

impact on your cable provider members? 

Mr. POLKA. I would say this, Mr. Chairman, and thank you for 

the question. I think that is a legitimate question that necessarily 

needs to be part of the review by the FCC and the Department of 

Justice. I have mentioned a number of video concerns today. There 

are many other aspects to this merger that do need to be reviewed, 

whether it is the cable advertising market, the broadband Internet 

competitive market, access to technology, development of technology, how that is used by the combined Comcast/Time Warner 

Cable, how that perhaps is meted out to other competitors. I think 

that is definitely a line of inquiry that the FCC and the DoJ have 

to pursue. 

Mr. GOODLATTE. Okay. Let me hop back to Mr. Schaeffer and ask 

you, in your testimony you discuss how traffic delivery was congested as a result of delivering Netflix content. You also have stated that you asked Comcast to add additional ports to decrease congestion. What are ports, and are they expensive to add onto the 

network? And please be brief because I do want to come back to 

Mr. Hemphill to give him an opportunity to respond to some of 

these matters. 

Mr. SCHAEFFER. Yes, Mr. Goodlatte. The port is the physical location where the traffic flows between the two networks. The capital cost is trivial, and we have actually offered to pay not only our 

capital costs for our ports to be added, but also to pay Comcast. 

And to date, they have refused to accept that offer. 

Mr. GOODLATTE. Thank you. Professor Hemphill, Mr. Cohen deferred to you to supplement his answer. And if there is anything 

Mr. Schaeffer or Mr. Polka have said that you wanted to respond 

to, have at it. 

Mr. HEMPHILL. Yes, sure. So I think on the first point, Mr. Cohen 

said, well, from an economic perspective, we would not expect some 

kind of shortfall in one market to be made up in another or vice 
158 

versa; that a savvy company is going to negotiate it as best it can 

with all of its counterparties, and that there is not some quota it 

is trying to reach. It will think about each of those negotiations 

separately. 

I think with respect to the conversation we have been having 

about ports and peering and whether any of this raises a foreclosure concern, I think it is important to understand that payment 

for connectivity, payment for interconnection is not new. It is not 

a new fight. It has always been the case that a payment is either 

going to be made through cash or through reciprocal carriage. 

And so, to think about this as a foreclosure concern I think is 

wrong. I think what is really going on is a fight about who should 

pay for what in this, in a lot of ways, highly competitive business 

of interconnection. 

Mr. GOODLATTE. Thank you. My time has expired. Thank you, 

Mr. Chairman. 

Mr. FARENTHOLD. Thank you, Mr. Chairman. I will now go to the 

gentleman from New York, Mr. Jeffries. 

Mr. JEFFRIES. Well, thank you, Mr. Chairman, and let me thank 

the witnesses for your presence here today. Let me begin by just 

associating myself with the remarks, and observations, and concerns of Mr. Johnson connected to the implications of this merger 

on women- and minority-owned businesses within the cable and 

Internet video space. 

Let me also acknowledge that amongst the constituents that I 

represent, a substantial number of cable subscribers, as you know, 

obviously are Time Warner customers. And Time Warner has certainly been a very responsible corporate citizen in terms of its community engagement in Brooklyn and in Queens. And I have every 

reason to believe that that will occur given Comcast’s track record, 

should this merger be approved, particularly as it relates to the expansion of Internet essentials. 

But there are some issues that they are concerned about that I 

want to explore. So let me begin with Mr. Cohen. Now, you testified that the merger will result in substantial benefits to consumers, correct? 

Mr. COHEN. Correct. 

Mr. JEFFRIES. And you indicated that Comcast can promise faster Internet speed as a result of the merger, true? 

Mr. COHEN. Correct. 

Mr. JEFFRIES. You also indicated, I believe, that greater customer 

choice is a likely benefit of the merger, correct? 

Mr. COHEN. Better customer choice in terms of on demand TV 

everywhere, correct. That is correct. 

Mr. JEFFRIES. Okay. And then I think you also indicated that innovation will result from the merger, and then that could translate 

into enhanced video, voice, and/or Internet opportunities for the 

consumer, correct? 

Mr. COHEN. Scale leads to investment in R&D and innovation, 

better networks, more secure networks, more reliable networks, 

and ultimately innovation of the future just like our larger global 

and national competitors are investing our need to be able to look 

around the corner and to develop products for 3 years from now 

and 5 years from now that we are not imagining today. 
159 

Mr. JEFFRIES. Okay. And I have no reason certainly to disagree 

with that, and I think that is a sound premise to operate under. 

However, as many of my colleagues have observed, there has been 

no commitment given today by either you or Mr. Marcus as it relates to the impact of this proposed merger on consumer price. And 

that, in fact, is the issue that the people I represent in Brooklyn 

and Queens, who are currently Time Warner subscribers, are most 

concerned about. 

So let us see if we can get a little bit of clarity on that. Comcast 

is a publicly-traded company, correct? 

Mr. COHEN. Correct. 

Mr. JEFFRIES. And as a result of Comcast being a publicly-traded 

company, you have got a fiduciary obligation to your shareholders, 

true? 

Mr. COHEN. That is correct. 

Mr. JEFFRIES. And part of that fiduciary obligation, and I assumed connected to it you have concluded that this merger will 

likely result in greater profitability for Comcast if it were to be approved, correct? 

Mr. COHEN. I think the answer is basically yes, but I really want 

to say this: A couple of years ago we woke up and we realized that 

we are now competing in a different class. And I forget, a couple 

of Members have referenced this, this world is changing with explosive speed. And so, the business rationale underneath the merger 

really relates to our ability to innovate, invest, and to stay competitive. 

Mr. JEFFRIES. I understand. 

Mr. COHEN. All right, so—— 

Mr. JEFFRIES. And I do not want to cut you off, but my time is 

limited. 

Mr. COHEN. Okay. 

Mr. JEFFRIES. You did acknowledge, though, basically, yes, you 

expect—— 

Mr. COHEN. Well, it is more profitable compared to what it would 

be—— 

Mr. JEFFRIES. Well, let me finish the question. 

Mr. COHEN [continuing]. If we were not able to innovate, invest, 

and continue to grow. 

Mr. JEFFRIES. Oh, I understand. 

Mr. COHEN. Okay. 

Mr. JEFFRIES. And that is a very sound point and consistent with 

your fiduciary obligations to your shareholders, and I would expect 

nothing less. I guess the question that my constituents would expect me to ask is, is it not reasonable for them to assume that pursuant to a merger likely to result in greater profitability and a bigger, better Comcast post-merger, that there will be some positive 

benefits for them in terms of impact on price? 

Mr. COHEN. So I do not know whether it is appropriate for them 

to assume that. It is certainly our expectation that out of this 

transaction will come a significantly improved customer experience 

with customers more satisfied with their service. There is more to 

making customers happy than the just the price that we charge 

them. It is the value that we are delivering to them. 
160 

And we believe very strongly that consistent with our fiduciary 

duty to shareholders, we have to focus on price, focus on customer 

satisfaction, focus on customer service as a way to preserve and 

grow our customer base in an intensely competitive market, and 

that all of those interests are aligned. 

Mr. JEFFRIES. Thank you. 

Mr. BACHUS [presiding]. Thank you. And let me say this to the 

panel. After Mr. Smith of Missouri does his questions, we will take 

a 10-minute break because you all have been in the chair quite 

some time. Mr. Smith of Missouri is recognized for 5 minutes. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. My first 

question is for Mr. Cohen. You testified that Comcast and TWC 

currently serve different geographic areas and do not offer services 

to the same consumers. Yes or no, will the consumers in either 

company’s geographic areas experience any decrease in competition 

for video broadband or voice service if this transaction is approved? 

Mr. COHEN. Unequivocally no, they will not. 

Mr. SMITH OF MISSOURI. Okay, thank you. Mr. Polka? 

Mr. POLKA. Yes? 

Mr. SMITH OF MISSOURI. As you know, many of your member 

companies are in rural areas like the areas of Missouri that I represent. Though they do not in my area compete directly with 

Comcast or Time Warner, does this merger affect cable operators 

who do not directly compete with Comcast? 

Mr. POLKA. Yes. Yes, they do, Congressman. And, in fact, our incoming Vice-chairman is one of your constituents, Patty Boyers 

from Boycom Communications. It does impact those companies that 

do not compete directly with Comcast and Time Warner in the acquisition of programming and in the acquisition of programming 

pricing. 

As I mentioned before, with the combination of Comcast distribution assets with Time Warner Cable assets, because of their size 

and ability to demand lower prices from other programming content providers, it also does have an impact on the prices charged 

by all other multi-video programming distributors like Boycom, 

which means if, to David’s point, we may not see this yet until 

there is more that comes out from the merger review. Our prices 

to our members, our wholesale programming prices, might increase, but certainly because of the ability of Comcast/Time Warner 

combined to drive their wholesale programming pricing down, it 

will create a bigger disparity in pricing between Comcast, Time 

Warner, and all other multi-video programming distributors who 

buy programming primarily through the National Cable Television 

Cooperative. 

So the end result is Comcast will pay a lower rate, and the disparity in programming prices between Comcast and our members 

will increase. 

Mr. SMITH OF MISSOURI. So virtually the 10 or so small companies in my district probably would see an increase while Comcast 

may see a decrease. 

Mr. POLKA. That is what we expect to occur, yes. 

Mr. SMITH OF MISSOURI. Okay. Mr. Schaeffer, as someone who 

has been involved in the Internet’s backbone for some time, I would 

like to ask you a question about interconnection. What effect would 
161 

the merged Comcast/Time Warner have in the marketplace negotiations with your company and other transient providers? 

Mr. SCHAEFFER. It would have a significant impact in that 

Comcast would now control access to a greater number of consumers and extract additional market power. For those consumers, 

when they enter into a contract to buy broadband, they do not really I think mortgage their eyeballs. And I think Comcast views that 

they do. 

Mr. SMITH OF MISSOURI. Okay, thank you. Mr. Patrick Gottsch, 

I was interested with your testimony about RFD-TV being dropped 

from Comcast in Colorado and New Mexico. What was the reason 

that they cited of why they dropped you? 

Mr. GOTTSCH. Well, Mr. Cohen’s explanation today that it was a 

bandwidth issue, and they had to drop one channel, and they 

picked our channel. The thing that concerns me is that is it now 

the policy of Comcast going forward when they need bandwidth, 

are they going to just be dropping independent channels from those 

markets without any regard to support from the audience, without 

regard to price, without regard to anything that an independent 

channel has going? 

Mr. SMITH OF MISSOURI. Mr. Cohen, are there any reasons why 

RFD was dropped other than bandwidth? 

Mr. COHEN. The answer is it was primarily a bandwidth driven 

determination. There was a determination by the local market that 

the consumer demand for that particular channel in that market 

put it at the top of the list to be considered being dropped. It had 

nothing to do with the fact that it was independent. It certainly 

had nothing to do with our 8 percent ownership interest in Retirement Living TV, which is a completely unlike channel. 

Mr. SMITH OF MISSOURI. My concern is this is that it is a rural 

TV station, and folks in my area rely on it and watch it quite often. 

And if other people across this country in non-urban areas want to 

watch it, I hope that they have the opportunity. My question is, 

can you give me any documentation showing, like, the 400,000 

households in the Colorado area where there were other independent or other cable television networks that had lower 

viewership than RFD that you did not drop? 

Mr. COHEN. We can certainly follow up on that, and I will get 

back to you. We can put it in a QFR and address that in the QFR 

process. 

I do want to emphasize, we still carry RFD-TV to 600,000 or 

700,000 of our customers. And so, this is not a situation where we 

simply said this is a terrible channel and we do not want to have 

anything to do with it anymore. It was a local market decision. And 

again, I hear and I understand the content being rural content. I 

want to emphasize again we are primarily an urban cluster cable 

company. Even in western States, most of our consumers are in 

urban areas, so it is our goal to provide programming to our customers that they want to see, and we are not depriving anyone of 

access to RFD-TV because they have broad carriage on DISH and 

DirecTV, and all of the customers in those markets. 

Mr. SMITH OF MISSOURI. Just only to your consumers, the 

400,000 in Colorado and the 70,000 in New Mexico. 

Mr. COHEN. Right. 
162 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. 

Mr. BACHUS. I thank you. At this time, we are going to reconvene 

at about 8 minutes after. And I thank you for your patience, and 

will allow you to take a—— 

[Recess.] 

Mr. BACHUS. We will now resume our questioning under the 5- 

minute rule. And at this time, I recognize Mr. Garcia for questions. 

Mr. GARCIA. Thank you, Mr. Chairman. Mr. Hemphill—am I pronouncing that right? Yes, there you are. Much has been made 

about the size of the proposed Comcast/Time Warner merger leading some to compare this with the failed AT&T/T-Mobile deal. But 

unlike that case, Comcast and Time Warner do not compete headto-head in local markets. So how important do you think that distinction is in this case, and do you see adverse impacts from that 

merger based on that? 

Mr. HEMPHILL. So size can be good. Size can be bad. It all depends on the transaction. So I think the size of the deal in itself 

does not tell us much about whether we should be concerned. As 

I mentioned before, I think the absence of head-to-head competition 

in output markets or, for that matter, in input markets is crucial 

to understanding the deal. That does not mean that Department of 

Justice should just pack up and go home. They still need to pay attention. 

And we have heard a lot about at least conceivable or theoretical 

foreclosure effects, and I think it is important to take a close look 

at that. But that whole investigation, that whole way of thinking 

is quite a bit different from the usual merger analysis of output 

markets or, to a lesser degree, reduced competition in input markets. 

Mr. GARCIA. As you are probably aware, I represent a very large 

Hispanic community, and so I have heard from some of my constituents who have a few concerns. I know some were addressed 

earlier today, and I was very satisfied with that. But I want to ask 

you, in my diverse community, a rapidly increasing part of the 

market with increasingly diverse and growing consumer needs, it 

is important that emerged Comcast/Time Warner shows a strong 

commitment to ensuring that new and creative Latino programmers are provided with the opportunity to reach that growing consumer market. 

How do you think that can be achieved, and how can we make 

sure that what is I am sure one of the valued assets in this continues strong and continues providing the great service that it 

does? 

Mr. COHEN. So this something we have spent a lot of time discussing both on the distribution side as well as the content side of 

NBCUniversal because we have a strong commitment to making 

sure that we have outlets not only for existing diverse voices, but 

for new diverse voices. So I have talked about the new channels 

that we have launched. I have talked about 58 channels of Hispanic and Hispanic-themed television. Let me talk about a few 

other things which I think is in the same space. 

So one of the best ways with evolving technology to reach customers is through our VOD service, and we have substantially expanded the number of VOD, video on demand, hours that are avail-
163 

able and, in particular, for diverse audiences, including the Hispanic community. Similarly, there is a lot of content that we are 

now delivering online, and which may not be enough to make up 

a channel or even a whole program. And that online content is a 

great outlet for young, new diverse producers/directors. They do not 

have to put a whole movie together to be able to get anyone to look 

at it. They can produce a 7-minute video, you know, on youth violence in South Miami, and that can be available for us to be able 

to put online. 

So we have created on the distribution side the Xfinity Latino 

website, and that features about 9,000 choices and 2,500 hours of 

content that is available free to Xfinity Latino customers, and there 

is a great mix of content in that particular site. We also hosted the 

largest ever Hispanic video on demand event in 2013. It was called 

Xfinity Free View Latino, and we are going to do that again in September of this year. 

So these are some of the ideas that we have created. I should say 

on the NBC side, one of the things I would point to is what we are 

doing in the news space, that we created a news vertical on the 

new NBC.com website. So we have a Hispanic news vertical, which 

is providing an opportunity to be able to target news-related programming to the Hispanic community, and also to allow young and 

aspiring producers and on air talent to sort of try out their talent 

on a website basis before they would go to the broadcast network. 

Mr. BACHUS. Thank you. At this time I recognize Mr. Collins for 

5 minutes. 

Mr. COLLINS. Thank you, Mr. Chairman. Mr. Grunes, I am concerned about the impact of the merger, and we have had some conversations with both sides on this, on small businesses that advertise on cable television. Today small businesses are able to utilize 

cable television advertising to geo target their ads in a cost effective manner. However, an independent analysis by SNL Kagan has 

concluded that a merged company would control a very substantial 

share of this local cable spot advertising market, reducing competition and raising the cost of cable advertising for small businesses, 

which would affect my area in a big way. 

Can you provide information regarding the scope of Comcast’s 

cable advertising business if this merger is approved? 

Mr. GRUNES. Thank you for the question. And I will start by saying in the last merger, the NBCUniversal/Comcast transaction, advertising markets were not really as important because broadcasting and cable advertising are traditionally viewed as in different markets. This one is different, so there are a variety of ways 

that advertisers can get onto cable at this point. My understanding, 

it is about a $5 billion market, and that post-merger the combined 

company would dominate two of the three ways that advertisers 

can get on. 

The predictable result, in my view, is that smaller advertisers 

are simply not going to get access to local cable. That time will be 

sold elsewhere. 

Mr. COLLINS. Okay. So your understanding is it is a negative impact. Mr. Polka, in your testimony you argue that the Comcast 

merger could have a detrimental effect on the viability of online 

video competitors, such as Netflix and Amazon, as it was going 
164 

along. I share the concerns. I am concerned that the traditional 

FCC assessment of potential implications of a merger may no 

longer be adequate to promote and competition on both the content 

side and the telecom side. I think there is an interesting argument 

that could be made that in certain situations consolidation is used 

a shortcut to growth. And instead of investing and competing directly for subscribers, they simply buy each other’s subscribers. 

In your opinion, this merger in particular, does it remove the 

competitive dynamics that we are looking at here from the markets, that otherwise drive improved quality, increased choice, and 

lower costs, because it really seems that DoJ and FCC craft merger 

specific regulations to check the harms of really the competition 

and consumers and lose sight of promoting the competitive marketplace. So I am not as much antitrust. I am looking at the competitive marketplace. So, Mr. Polka, do you have a comment on that? 

Mr. POLKA. Yes, sir. Yes, sir, we do. The fact of the matter is 

when a company like a Comcast and a Time Warner Cable, and 

particularly on the Time Warner Cable side where there are competitors such as an RSN or a Grande, which do compete with Time 

Warner Cable, there is an incentive to be anti-competitive and to 

charge higher prices. We do believe that there will be an impact 

on the competitive market for companies that are providing services competitively today to Time Warner Cable as a result of the 

combination with Comcast. So, yes, sir, we do believe that there 

will be an impact on competition. 

Mr. COLLINS. Do you have any examples that might have led you 

to that conclusion? 

Mr. POLKA. The fact that we see price disparity today among our 

member companies that are in competition with Comcast and Time 

Warner. And what we expect will be even greater ability to leverage programming sources in ways that will raise prices to competitors. If you are in a marketplace today with a competitor, I mean, 

it just stands to reason that you have an incentive to be anti-competitive, and that is what we expect in this market. And we expect 

that that will be fully reviewed, and we certainly will be raising 

those concerns at the FCC and the Department of Justice. 

Mr. COLLINS. Okay. And that is fair. One of the things from my 

perspective is I believe, frankly, government should stay out of 

businesses except in a marketplace fairness kind of issue. And even 

then it should be at a very hands length. And we have had the conversation, and Mr. Cohen and I have discussed and others. 

But, Mr. Cohen, I have a question for you. Sometimes my questions actually come from the witnesses’ testimony, and yours has 

driven a question. A few minutes ago, my friend from Missouri 

asked a question about RFD-TV in Colorado, and basically asked 

you what I consider—you knew he was going to be testifying today. 

It would seem like you would have probably have become very 

much of an expert on what happened. 

And you were asked a very direct question on the issue was 

there other independent channels or non-independent that had less 

than 400,000 subscribers than RFD on this dropping of them. Do 

you know if there less than 400,000 or are just withholding because 

of proprietary reasons? I am just curious as to why you would not 

know if there were other channels that had less subscribers. 
165 

Mr. COHEN. I was not sure that was the question. It might have 

been. 

Mr. COLLINS. It was the question. 

Mr. COHEN. I thought the question was—— 

Mr. COLLINS. Reclaiming my time. Reclaiming my time. 

Mr. COHEN. I thought—— 

Mr. COLLINS. It was the question. 

Mr. COHEN. I thought the question was were there other independent channels that were lower rated than RFD-TV was. I 

thought that was what the question was, and I do not know the 

answer to that question. We will get the answer to that question 

and respond in a QFR to that question. 

Mr. COLLINS. Well, and I am glad you have QFR down. What is 

interesting to me is 400,000 in that market, even in an urban market, and I have both urban and rural, that seems pretty good. And 

to claim it is just an urban and rural kind of issue, that struck a 

little hollow because there are a lot of folks who have moved from 

the farm to the urban areas and still like to be connected to the 

farm. And so, that was just an interesting—— 

Mr. COHEN. I want to be really clear because I said this, too. I 

personally, and our company just does not have a problem with 

RFD-TV. We think it is good content. We are carrying it to 700,000 

of our customers in multiple markets. There was a local market decision here that there was greater consumer demand to move to 

high definition for a number of other popular channels in the market. By the way, that is not a permanent decision. It was a decision 

that was made at the time based on bandwidth constraints as they 

existed at that time. 

Mr. COLLINS. I am not—— 

Mr. COHEN. So I do not want to minimize the value of this network, the value of its content, its appeal to consumers, including 

our consumers. So I hope I am being very clear about that. 

Mr. COLLINS. Well, and I—— 

Mr. BACHUS. And thank you. 

Mr. COLLINS. Could I just have—— 

Mr. BACHUS. Yes. 

Mr. COLLINS. I am not questioning your commitment to RFD or 

anything. My question was just a concern on the specificity of your 

answers given the fact that they would be here and this would be 

an issue. And that was the only purpose of my question as we go 

forward. And, Mr. Chairman, I yield back. 

Mr. BACHUS. Mr. Cicilline is recognized for 5 minutes or 5 minutes and 30 seconds. 

Mr. CICILLINE. Thank you, Mr. Chairman. I thank the panelists 

for being here, and I apologize for being in and out. I have a Foreign Affairs Committee hearing at the same time, so I apologize to 

the members of the panel. And if you have answered this question, 

I am happy to go onto my second one. 

Mr. COHEN AND MR. Marcus, I presume, are in the best position 

to answer this. But would you speak to what the impact is or the 

projected impact on jobs? I know it will impact different sectors of 

your workforce differently, but obviously in general we, I think, 

imagine that mergers result in efficiencies that result in job loss. 
166 

And if you could talk a little bit about the workforces of the two 

companies and what a merged company’s impact might be on jobs. 

Mr. COHEN. Okay. New question for the day, so happy to answer 

it. So I think you have to break the jobs down into two different 

categories here. The vast majority of cable industry jobs are local 

system jobs. There are local technicians or local management 

teams, local call centers, the local people who run the system. And 

in that area of jobs, we do not forecast any impact on jobs in this 

transaction at all for the same reasons that we continue to say that 

we do not compete in any market. 

When we take over a Time Warner Cable system in New York 

or in North Carolina, we do not have any employees there who are 

running cable systems. We will need their employees, and we will 

need approximately the same level of employment to operate the 

systems as existed before. 

In terms of corporate headquarters jobs, corporate headquarters 

type jobs, you know, we each have a legal department. We each 

have an investor relations department. I mean, those are jobs 

which in a transaction of this type you are likely to see some rationalization and some elimination of employment. But it is only at 

the headquarters level, which is a very small minority of the jobs 

in both of our companies. 

Mr. CICILLINE. Thank you. I know it has been said many times 

during this hearing that Comcast does not compete with Time Warner in a single zip code. And one of the things that Mr. Grunes argues in his written testimony is that the lack of direct competition 

in local markets could also be used to justify Comcast’s acquisition 

of other major cable companies like Cox and Charter. And so, I 

would like to ask you, Mr. Cohen, how would you respond to that 

argument that there would be little to prevent Comcast from acquiring other major cable providers based on the lack of direct competition? And what do you see as the effect that this merger would 

have on future mergers in the communications marketplace, and 

what would, for example, prevent a well-capitalized company from 

horizontally merging with any video or broadband provider that is 

not a direct competitor in a local market? 

Mr. COHEN. So as a former antitrust lawyer, a recovering former 

antitrust lawyer, I will give the only answer I can to that, which 

is that every transaction has to be viewed on its own merits. We 

have to look at each transaction as it comes along, and I do not 

think it is sound antitrust or economic theory to say you should not 

approve this merger because the next merger might not be able to 

survive antitrust scrutiny. 

So I am very focused on this particular transaction. I think this 

potential transaction has strong consumer and public interest benefits. I think it has minimal antitrust and competition policy risks. 

I do not think in making any of those arguments I am creating a 

precedent that we could acquire anything we wanted to acquire 

and there would be no problem under the antitrust laws. And I do 

not think that this transaction or the questions that you are asking 

are creating a precedent that any other transaction in the cable or 

broadband or telecom space would have to be approved if this 

transaction were approved. 
167 

So I think you have to visit each transaction as it comes, and if 

this transaction is approved, that will result in a market that looks 

in a particular way. And when the next transaction comes along, 

it will have to be judged against that market on its own individual 

merits. 

Mr. CICILLINE. I do not know if there are any of the other panelists who wanted to respond to that. 

Mr. GRUNES. I just do not see a limiting principle, and that is 

something that I wrote about. Given the arguments we have heard 

here today, if they do not compete with somebody, then their argument is they are free to buy that company. And given the other argument, which is we get advantages of scale, well, you get advantages of scale if you buy everybody else as well. So it troubles me. 

My view is that DoJ is going to look harder at this merger because of that issue because 2 years from now Comcast could be sitting in this room again with a different series of arguments with 

a different merger in front of it. 

Mr. HEMPHILL. Just one quick thought about it. I completely 

agree with the earlier expressed point that you have to look at each 

transaction on its own merits. Two quick points. You could imagine 

an alternative transaction in which the foreclosure concerns that 

were raised—this case is not only about whether there is direct 

competition—where the foreclosure concerns were stronger than 

the ones that seem to be present here. And second, in which the 

existing prophylactic protection of the earlier NBCU consent decree 

and the continuing applicability of the open Internet rules to 

Comcast and post-transaction to Time Warner Cable where those 

were not present. So I think those are important distinctions here 

that you might not see in every transaction that comes down the 

pike. 

Mr. GRUNES. And I think—— 

Mr. BACHUS. As you all testify, kind of pull that mic up a little 

bit because sometimes you turn away from them. 

Mr. GRUNES. I think what Mr. Hemphill said is if we could see 

such a transaction, I think this is that transaction. 

Mr. CICILLINE. Thank you, Mr. Chairman. I yield back. 

Mr. BACHUS. Thank you. Mr. Issa for 5 minutes. 

Mr. ISSA. Thank you, Mr. Chairman. Hopefully this late in the 

day there is some original work I can still bring to the Committee. 

I think in 2009 when the approved buying of content, a major 

amount, huge amounts of content, by a major force in cable occurred, we already passed a certain lexicon of where we are today. 

So I have less concerns specifically about the merger than I do 

about this Committee’s role now and in the future. 

I also serve on Energy and Commerce even though I have been 

on a leave of absence for a number of years. And being on both 

Committees, Mr. Chairman, what I discover is we have got a bad 

set of questions, which is on one hand we regulate over at Energy 

and Commerce, and we are constantly talking about the competitive environment as though E&C should worry about competing, 

particularly through the FCC. And then over here we look at the 

Sherman Antitrust and say check the box, do they meet it. And 

then we find that the Justice Department is a hybrid of the two. 
168 

So let me just state my concerns, and then hopefully we will get 

some question that may not apply only to today. I think we could 

agree that if the merger was all about an organization, Time Warner and Comcast, where they were going to combine and all they 

were going to do is supply data to anybody who wanted to put their 

entity onto the pipe and sell it to me. And if I was a cable customer 

and all I bought was a pipe that gave me data, and that is all of 

this is. We are no longer dealing in analog. Everything is data. 

So then we would only be saying as a public utility, are you a 

public utility because you have an exclusive or is there competition 

for data. We cannot have that debate because you have become too 

complex a company. You are a major buyer and reseller of content. 

You are a major owner and developer of content, and if your inhouse product competes against products that you may choose to 

buy, you may choose to negotiate buying, and you may choose to 

put somewhere in your channel spectrum and your packages in a 

way that are adverse to the view of that content seller. Can we all 

agree on that? Have I mentioned anything that is controversial to 

any of you that are for or against? 

So if that is the case, then this Committee will have little choice 

but to see that, from what I can tell, you have met the basic criteria. You are dropping your percentage down to 30. You are not 

a new content entity. There is probably not going to be any credible 

argument before Justice that somehow things are changing in any 

particular market. And if there is, you are prepared to shed a market here, a market there in order to meet that. Does anyone disagree that that is probably where we are? 

[No response.] 

Mr. ISSA. Do you believe that there is a specific event in this 

merger that clearly tips over based on precedent? Is that correct? 

Mr. GRUNES. Yes, sir. 

Mr. ISSA. What is that? 

Mr. GRUNES. I think that we are at a point in the broadband 

market and where Comcast’s power over innovative competitors, 

the same competitors—— 

Mr. ISSA. Name the competitor. Be quick. I do not have a lot of 

time. Name one. 

Mr. GRUNES. Netflix, et cetera. 

Mr. ISSA. You are afraid that the delivery of data for Netflix will 

be adversely affected by this. 

Mr. GRUNES. I am afraid that Comcast as an incumbent has an 

incentive to stifle the next big thing, and the next big thing is 

Internet. 

Mr. ISSA. Okay. Anyone have anything else? That pretty well— 

okay. Then I will direct my question particularly to Mr. Cohen. Mr. 

Marcus, you could weigh in. X1 is a delivery from the net cloud 

that you are rolling out and you are very proud of. You have rolled 

it out. Announced it pretty much today, right? 

Mr. COHEN. I mean, it is a video delivery system, cloud based. 

It is not an Internet delivery system. It is for our video product, 

not our broadband product. 

Mr. ISSA. But it is a pay per view. It is an on demand. 

Mr. COHEN. It has on demand, pay per view, video. 
169 

Mr. ISSA. Okay. So not for antitrust purposes on this side, but 

over at E&C the FCC could say that that is a great product, but 

since Netflix could feed into the DVR and come through that pipe 

and be entitled to a no premium cost equal access to what you are 

delivering on your X1 platform, the case could be made that all 

video content large and small would be delivered exactly the same 

from this DVR/pay per view because whether I buy it and Netflix 

delivers it to the X1 or I record it off an equivalent off air and put 

it in the X1. When I ask for it, it would be delivered the same. 

Technologically, that is correct, right? 

Mr. COHEN. Theoretically, the FCC could open up our networks, 

could open up our user interface. We would obviously have serious 

objections to that, but theoretically the answer to your question is 

yes. 

Mr. ISSA. But the FCC has said you have to give equal access 

and you cannot charge a premium for a non-in-house product 

versus an in-house product. That is already a given, right? 

Mr. COHEN. Well, the problem is X1 is delivering a Title 6 cable 

service. The FCC could say that if we put, let us say, an Amazon 

app on our X1 platform, that having once decided to do that, we 

have to open that up and allow any competitor to have its app on 

our X1 set top. 

Mr. ISSA. Okay. I want to close up because I only have one, but 

one is a lot to get in 5 minutes. What I see here today and what 

I am convinced that this Committee in its jurisdiction needs to do 

is we really need, Mr. Chairman, to have a pretty broad discussion 

about existing antitrust laws, the tie-ins, versus how the FCC, 

which does not fall under our jurisdiction, is creating or not creating competition using things both in the, if you will, the true 

data side and the video, which really is still true data these days. 

That, in fact, we really need to look at antitrust laws as the FCC 

implementation is going on because I am convinced today, Mr. 

Grunes, I am convinced today that the merger candidates have 

gone through the check the boxes necessary. 

What I am not convinced about, and I hope that this Committee 

will do, is that in this world of antitrust versus competition, that 

our reach into the guidelines and what the FCC can or must be required to do is something that between this Committee and primarily E&C, we need to have a robust discussion because pro-competition versus anti-competition is really a question that is linked 

inseparably to current antitrust laws, which talk about market 

power that distort. But they do not really talk about market access 

that promotes. 

And so, as somebody who looks at the cloud and its potential, I 

see your new product, Mr. Cohen, as a cloud that would say clearly 

to the FCC that they could create an environment in which all content would be delivered equally because once you have a pay per 

view or a non-pay per view, but a cloud product that delivers to me 

what I want to one unit, you can deliver anything video to that one 

unit. And there is really no difference in the bandwidth asked for. 

There is only a question whether I am using the product I recorded 

online so to speak, and now I want delivered or an alternate product. 

Mr. BACHUS. Thank you—— 
170 

Mr. ISSA. So, Mr. Chairman, I think this hearing is giving us a 

reason to do legislative and hearing reforms that really tie in what 

the FCC is doing under the competition, what they are doing under 

net neutrality in this Committee. And I hope we will seize the opportunity to expand our reach into that process because when we 

are done, I do think that we are not going to accomplish anything 

significant because I think you can check the box today. But I believe we should do more to make sure that there is access for the 

consumer. And I thank the Chairman and yield back. 

Mr. BACHUS. Thank you, and we are hearing some of those concerns. At this time, I actually will go Mr. Johnson. We are going 

to go through the first, and Mr. Marino, and then Mr. Gohmert. 

Yes, Mr. Cicilline has already testified—I mean, already questioned. Mr. Marino is recognized for 5 minutes. 

Mr. MARINO. Thank you. Gentlemen, I am a former prosecutor. 

I have six questions. I have 5 minutes. I would like yes or no answers with a brief description, if you would, please. Mr. Grunes— 

am I pronouncing that correctly? 

Mr. GRUNES. Grunes. 

Mr. MARINO. Grunes, thank you. I apologize. You said the next 

best Netflix could be stifled. Is that what you said, correct? 

Mr. GRUNES. Innovation and—— 

Mr. MARINO. Innovation can be stifled. 

Mr. GRUNES. Can be stifled, correct. 

Mr. MARINO. Okay. Is that not what DoJ and the courts are for? 

Mr. GRUNES. It is exactly what DoJ and the courts are for. 

Mr. MARINO. Okay. Mr. Cohen, I am from Pennsylvania, and 

Comcast has a very large presence in Pennsylvania and in my district, which is the 10th Congressional District of Pennsylvania, my 

hometown of Williamsport. What will be the impact if this merger 

is concluded on present jobs and the prospect of future jobs—with 

an ‘‘S’’—expansion? 

Mr. COHEN. So the answer is in Pennsylvania, there is no job 

risks in this transaction. As I have said before and I will just briefly say it again, most of the jobs in cable are local system jobs, so 

the local Comcast system in Williamsport, there are no jobs at risk 

there. There are no Time Warner Cable employees anywhere near 

Williamsport that we would use instead of the employees in Williamsport. And obviously our headquarters is in Philadelphia, 

so—— 

Mr. MARINO. How about expansion? 

Mr. COHEN. I think, you know, I do not know. I mean, we are 

continuing to grow jobs in Pennsylvania today, so I think we are 

going to continue to expand jobs. 

Mr. MARINO. I appreciate that. 

Mr. COHEN. But it does not have anything to do with this transaction, to be fair. 

Mr. MARINO. All right. Now, I have heard from some of my constituents, independently operated opinion programs, and some of 

my Republic colleagues, that this merger will further expand more 

of an imbalance in opinion reporting with an already left of center 

media. What say you, Mr. Cohen? 

Mr. COHEN. So as a cable operator, if that question is directed 

to me as a cable operator. 
171 

Mr. MARINO. Yes. 

Mr. COHEN. We strive to provide diverse perspectives and diverse 

viewpoints across our entire platform. I think cable as an industry 

has been a huge enabler of the explosion of diverse viewpoints, and 

I would expect us to continue to enable diverse viewpoints to be expressed across our cable systems. 

Mr. MARINO. I think you have answered my next question, which 

would be, what is Comcast’s philosophy on delivering that political 

view, but we will go on to the subsequent. Please describe how 

Comcast decides to carry new programs, particularly if you are considering—well, it does not matter—if you are considering a left or 

a right center opinion programming. 

Mr. COHEN. And so, we decide whether to carry programs based 

on our view of customer demand, customer interest, based on bandwidth needs, bandwidth constraints, based on financial viability of 

the networks. We never would make a decision about cable carriage 

for a channel based upon ideological perspective or viewpoint of 

that channel. 

Mr. MARINO. And in conclusion, am I going to lose my local news 

service in Williamsport, Pennsylvania? 

Mr. COHEN. I am sorry. Say that again? 

Mr. MARINO. Am I going to lose, because of this merger, my local 

news service? 

Mr. COHEN. So the local broadcast news? 

Mr. MARINO. Local broadcasters. 

Mr. COHEN. No. 

Mr. MARINO. All right. Thank you. I yield back my time. 

Mr. BACHUS. Thank you. At this time I recognize the gentleman 

from Texas, Mr. Gohmert, for 5 minutes. 

Mr. GOHMERT. Okay. Thank you, Mr. Chairman, and thank all 

of you for being here. I was part of a hearing some years back in 

California, a field hearing, before the NBC/Comcast merger. And 

there were questions raised, concerns about potential for hurting 

compatibility. But since then, more recently it was reported, of 

course, people took note that Al Gore was pushing the sale of Current TV, and Glenn Beck, TheBlaze, were trying to buy it. 

And it was reported that Al-Jazeera wanted to get their Sharia 

law pushed into the United States, and they were willing to pay 

big bucks, regardless of whether they had oil and carbon all over 

the money. They were willing to pay big dollars, but they would not 

do the deal unless Comcast was willing to keep them in its list of 

networks provided. So it was reported Comcast agreed, so Al Gore 

got all that oil and carbon-based money, and then that kept Glenn 

Beck off the air of Comcast. 

Then more recently, TheBlaze has been trying to purchase an- other network that was reported to owe $20 million to Comcast, 

but that the feeling by some within Comcast was so strong about 

keeping Glenn Beck off the air that some reportedly were willing 

to forego $20 million that TheBlaze offered to pay off this networks’ 

debt owed to Comcast just to keep them off the air. Now, I have 

no idea who the network is. They will not say. They have some 

kind of deal about that. But I was given a blurb from an email that 

indicates, and this is an email from somebody at whatever network 

it is. It is somebody at TheBlaze that says, ‘‘I want the ability to 
172 

argue for Comcast’’—he is trying to get the deal accepted by 

Comcast—‘‘that they will not have to put ’Glenn Beck on the air 

prior to the 2014 election.’ ’’ 

That may sound hard-nosed, but inside of that organization— 

talking about Comcast—there are some people who will see it that 

way. So December 1 accomplished that, so that would get the deal 

after the November elections. And this blurb was provided. There 

is too big a risk in my view of getting a flat no from Comcast if 

they smell the possibility that you intend to use the full Blaze platform to influence the American voters this November. Sorry, that 

is how they feel about you. I do not, but they do, and they are the 

ones who have to approve it. 

Now, we heard Mr. Jeffries, he is a smart guy. He brought up 

the issue of fiduciary duty. And I am wondering how strong the 

feeling within Comcast of their fiduciary duty to stockholders is for 

monetary gain as opposed to political achievements of keeping conservatives off the air. We have heard the discussion about rural not 

being part of the push by Comcast, and I get that. Why would 

Comcast want people that cling to God and their guns? 

But what we are talking about here is a very serious issue. If we 

are at the point where there is so much power within Comcast that 

they can say we are not going to accept the $20 million that will 

help Comcast because we do not want Republicans having conservatives talking on the air between now and then. Mr. Cohen, do you 

have a comment? 

Mr. COHEN. Should I do Al-Jazeera first, and then I will do 

TheBlaze? 

Mr. GOHMERT. No, I do not think you need to comment on that. 

Let us talk about TheBlaze and your feeling personally. 

Mr. COHEN. So I do not think I have a problem identifying the 

network I am using about this. 

Mr. GOHMERT. Well, I have no idea who it is. 

Mr. COHEN. It is interesting. That network happens to be RLTV, 

which comes up in the discussion on RFD as well. That is a network in which have an 8 percent ownership interest. We have no 

management rights. We have no ability to control the sale of that 

network. Your reading of the email—— 

Mr. GOHMERT. Well, the issue is do you allow the purchaser to 

continue to be on Comcast, because that can kill the deal with AlJazeera—— 

Mr. COHEN. The question is the content description under the 

RLTV contract with us, and that is a content description that does 

not include news coverage or political commentary. But let me be 

clear. You read an email presumably from someone at RLTV who 

is allegedly reflecting the position of someone at Comcast. I will 

represent to you and I will tell you right now. I am going to go 

back and I am going to confirm this. I will represent to you that 

there is no judgment being made about carriage of TheBlaze based 

upon political perspective, and certainly absolutely no judgment 

about whether that network should on our cable systems before or 

after the election. 

Mr. GOHMERT. Mr. Cohen, you are a smart man and apparently 

a smart attorney. You understand the consequences of not speaking 

truthfully before Congress. 
173 

Mr. COHEN. I do. 

Mr. GOHMERT. Thank you. I see my time has expired, and I look 

forward to you having that conversation at Comcast. 

Mr. COHEN. And we will report back to you. 

Mr. GOHMERT. Thank you. I look forward to that. Thank you. 

Mr. BACHUS. We will thank both of you. [Laughter.] 

At this time, Mr. Johnson is recognized for 5 minutes. I understand you are going to yield part of your time to Ms. Jackson Lee. 

Mr. JOHNSON. Yes, I am. I am going to take the first minute to 

ask a question, and then I will yield the balance to my colleague 

from Texas, Ms. Sheila Jackson Lee. 

The latest impact of this merger would be the issue of broadband 

availability and the ability of every citizen to afford access to the 

Internet. Comcast has launched the Internet Essentials Program, 

which offers low income families affordable broadband and digital 

literacy training. That program is capped in terms of the number 

of years that a family can be a part of it, and then after that the 

market rate then applies. Is there anything that Comcast plans on 

doing for people who are still poor and still unable to afford the 

service after the qualifying period ends? And if you will answer 

that question for me, and at which time I will yield the balance of 

my time to Ms. Lee. 

Mr. COHEN. Okay. In deference to Congresswoman Lee, I will 

give a very short answer to a question about which I am incredibly 

passionate. We are totally, irrevocably committed to Internet Essentials. For those on the Committee who are not aware, in 30 

months we have signed up 300,000 families, 1.2 million low income 

Americans, to the Internet at home, most of them for the very first 

time in their lives. And we have trained 1.6 million low income 

Americans in basic digital literacy in-person training under that 

program. 

Congressman, if I can, one correction. For everyone who is signed 

up for that program to date, they will remain eligible for the program and will continue to get $9.95 a month Internet service for 

as long as they have a child living in their household eligible to 

participate in the National School Lunch Program. It does not have 

to be the same child they have today. So if it is a young mother 

and she has got an 8-year-old today and goes on to have three more 

children, 20 years from now she will still be eligible for that pricing 

and that program. 

And in terms of our plans for the program, our plans are to expand it to the entire Time Warner Cable footprint to bring the benefits of Internet Essentials to New York, to Los Angeles, to DallasForth Worth, to Charlotte, to every community where Time Warner 

Cable does business today. And we are very excited about that, 

very passionate about it, very committed to it. And I would argue 

that it is another place where big is really good. 

Mr. JOHNSON. All right. 

Mr. COHEN. Having that expanded footprint will enable us to 

bring the benefits of that program to more low income Americans. 

Mr. JOHNSON. Thank you. I yield to Ms. Jackson Lee. 

Ms. JACKSON LEE. Mr. Johnson, thank you so very much for your 

courtesy. As a Member of the full Committee, I appreciate Mr. 

Bachus and Mr. Johnson for their courtesies, and acknowledge the 
174 

Ranking Member, Mr. Conyers. We worked on these issues, Mr. 

Conyers. And thank you for appointing me in a previous Congress 

to the task force that dealt with antitrust issues. 

We may have to look at a legislative construct that responds to 

all of the comments being made today, and I thank all the witnesses that are here. And, David, thank you so very much. I am 

going to join Mr. Gohmert to ask that we have an opportunity to 

meet one-on-one on a litany of issues that I have that I will not 

be able to ask here. So I look forward to getting us scheduled 

quickly. 

Innovation, greater customer choice—I am sort of following a line 

of questioning that we have heard and investment that will make 

a stronger infrastructure that I think that you and Time Warner 

are attempting to do. And we value that, just as we value the First 

Amendment and your privilege in the First Amendment. But all 

this ties to consumers. And so, I want to ask unanimous consent 

to put into the record a letter from the NAACP and NABOB and 

ask the question about stations like TV One that are not put on 

basic, but they are put on premium. 

Does that not raise the cost? I am concerned about the consumer. 

And two, what would be your view of spinning off, allowing a station like that, a network like that, to spin off before this gigantic 

merger, and buy themselves out so they can grow? 

Mr. COHEN. So thank you very much, Congresswoman. I would 

be happy to sit down with you and look forward to that. I answered 

part of these questions before—— 

Ms. JACKSON LEE. May I just pause for a moment? I know there 

is an ongoing matter on this issue, but I just want to put on the 

record—— 

Mr. COHEN. That is okay. 

Ms. JACKSON LEE. I just want to put on the record my concern 

about the lack of service regarding the Astros and the Rockets. I 

am not asking for an answer. If you can answer the other question. 

Mr. COHEN. I can answer that, too. So as a company, we are committed to providing diverse voices and diverse programming that 

represents the diversity of our customer base. We were very proud 

to have helped create TV One after the AT&T transaction. We remain a minority investor in it, as the congresswoman knows. TV 

One is actually carried on our most popular, lowest-cost digital tier 

to about 13 and a half million of our customers. 

Ms. JACKSON LEE. Not on basic. 

Mr. COHEN. Basic is sort of an old construct. This would be the 

equivalent of digital basic if you will. And in addition, we carry 10 

other African-American owned or African-American directed channels. Every one of them is on this digital basic tier of carriage. So 

we agree with the sentiment you express, and we agree with the 

need to be able to deliver diverse programming on an affordable 

basis to the populations who have the most interest in it. 

Ms. JACKSON LEE. You would be open to them to spinning off? 

Mr. COHEN. That has been our commitment. In terms of TV One 

and their buy-out of us, I am not 100 percent sure they want to 

do that, but we have made quite clear that if they would like to 

buy us out, we will let them buy us out. We have reciprocal rights, 

as I think you know, and there has been a concern that, gee whiz, 
175 

if we trigger our rights to buy you out, you have so much more 

money. You could just turn around and buy us out. We are prepared to work with Alfred Liggins and his mother to facilitate a 

buy out of our interest if that is what they are interested in pursuing. 

Houston Regional SportsNet, all I can say is it is not the best 

corporate governance structure and deal that Comcast has put together in its corporate history. A lot of dysfunction in that. The 

network is in bankruptcy. We are working to try and achieve a resolution that works for the Astros and the Rockets as well as us 

that may or may not involve us staying involved in the network. 

But consistent with our focus on consumers, you know, we do not 

want to stand in the way of consumers getting access to the Astros 

and the Rockets. We have tried very hard to make numerous creative suggestions to resolve those problem, and we are now doing 

that under the supervision of a bankruptcy judge. And I hope we 

will get to a satisfactory place for your constituents and all Rockets 

and Astros fans. 

Ms. JACKSON LEE. If we can pursue this—I do not think you answered—thank you—the question on consumer price and your efforts to contain the price that the consumer has with this merger. 

Mr. COHEN. Okay. So again, we have a focus on consumer pricing. We have talked previously in the hearing that the main driver 

of consumer pricing are programming costs. They have gone up 

about 120 percent over the last 10 years. Cable pricing has gone 

up at less than half of that rate, so we are doing a marginally acceptable job of being able to control passing out all those pricing 

increases to our consumers. We have tried to construct packages 

that are set at a lower price. Obviously they have fewer channels. 

Pricing and customer service are two issues that we think are vital 

to the future of our company and industry, and we are focused as 

much as we can on both of those issues. 

Mr. BACHUS. Thank you. 

Ms. JACKSON LEE. Let me thank the Chair and Mr. Johnson in 

his absence for their courtesy. Mr. Cohen, thank you so very much. 

Mr. COHEN. Thank you. 

Ms. JACKSON LEE. I look forward to us having the further conversation. 

Mr. COHEN. Thank you. 

Mr. BACHUS. Well, and let me say this. There is some expectation 

that the witnesses will tell the truth, and, you know, I noticed that 

you said you are happy and look forward to sitting down with Congresswoman Sheila Jackson Lee. So I am not sure—— 

Mr. COHEN. I really am. [Laughter.] 

We have been friends for a long time. 

Mr. BACHUS. I will take your word for it. 

Mr. COHEN. And I do not know Mr. Gohmert that well, but I am 

looking forward to sitting down with him as well. 

Mr. BACHUS. All right. Well—— 

Mr. COHEN. I like this. 

Ms. JACKSON LEE. I make people happy. You see my smiling 

face? [Laughter.] 

Mr. BACHUS. Yes. Well, you are a better man than I am, Mr. 

Cohen. 
176 

Mr. Farenthold? 

Mr. FARENTHOLD. The gentlelady from Texas and I sit together 

often on the airplane. 

Ms. JACKSON LEE. And we are friends. And, Mr. Bachus, we 

smile together, do we not? You have to clean that up. 

Mr. BACHUS. No, I am kidding you. 

Mr. FARENTHOLD. But I do join with the gentlelady from Houston 

in saying we are looking forward to getting our sports situation resolved. It bleeds down into Corpus Christie as well. 

You know, I am a customer of both Time Warner and of Comcast. 

Corpus Christie is Time Warner, and my apartment here in D.C. 

is Comcast. I am actually looking forward to the improved Internet 

performance in Corpus Christie, and these dropped packets and 

network resets I keep getting every few months. So that is one 

thing I am really looking forward to in this merger. And I do want 

to align myself with Mr. Gohmert. If it comes out you guys are 

making programming decisions politically based, I think there is 

going to be a problem, and I certainly hope that is not the case. 

I did want to talk about a couple of issues that were brought up. 

Mr. Schaeffer, you mentioned that the cost of adding additional 

ports, the hardware was trivial. But there is more to it than just 

hardware, is there not? I mean, you have actually got to get the 

pipes. 

Mr. SCHAEFFER. So Comcast has sold its customer service that if 

those customers actually use the service at the rates that Comcast 

has sold it, their network would fail to operate. So in order to mask 

that problem, they have limited the boundary capacity between 

their network and the public Internet to help reduce consumers’ 

use of broadband. 

Mr. FARENTHOLD. Right. So this actually, though, makes their 

deal with Netflix sound good. They have immediately opened up 30 

percent more bandwidth at your peering points, right? Because 

Netflix is not coming through your peering points. 

Mr. SCHAEFFER. But there is so much additional traffic beyond 

Netflix that wishes to go to Comcast’s paying customers that those 

ports still remain constrained. 

Mr. FARENTHOLD. Mr. Cohen, I mean, that kind of makes you 

guys look like bad guys. You know, I am geek enough that I will 

run speed tests, and if I go to the Time Warner Roadrunner speed 

test I do much better than if I go somewhere else. Just the same 

happens if I stay on the Comcast network, I do better. In order to 

offer that high speed Internet, you have got to get your peering in 

order. Is that—— 

Mr. COHEN. I mean, I want to say this again. I mean, our 

peering is in order. We are good citizens in the peering network 

and in the peering world. We work very hard to work with all 

peering partners, whether it is settlement free peering or paid 

transit. As Professor Hemphill said, this is not headline news. This 

is—— 

Mr. FARENTHOLD. You all actually do better than Time Warner. 

I am going to be honest about that. Apologies to the folks down in 

Corpus Christie. 

Mr. COHEN. I mean, I really think we are good citizens and we 

have good arrangements. And the issues that we have had have 
177 

been truly isolated, and we have worked very hard to be able to 

resolve those without ever de-peering a partner of ours in the interconnection—— 

Mr. FARENTHOLD. I have got a couple of other questions, and I 

am running out of time. But you have your boxes, all your cable 

folks. I think you are almost entirely digital now where you have 

very few subscribers who do not have a cable box. Is that correct? 

Mr. COHEN. Well, we are 100 percent digital. 

Mr. FARENTHOLD. Right. 

Mr. COHEN. So, yes, you need some type of a cable box—— 

Mr. FARENTHOLD. Cable card or box. 

Mr. COHEN [continuing]. Or a converter box for every television. 

Mr. FARENTHOLD. Do you have the ability then to pull those 

boxes to see how many people are watching what channel for what 

time? 

Mr. COHEN. So with the advent of big data, this is beginning to 

be something that we are looking at and beginning to focus on. We 

probably do have the technological ability to do that. But as you 

may know, cable is subject to intense and restrictive privacy protections and privacy restrictions that go far beyond what applies on 

the Internet, for example, with what Google and Yahoo can do with 

the data that they obtain. 

Mr. FARENTHOLD. But we can eventually get the data. You would 

know, so when Mr. Gottsch says he has got more viewers than 

some of your other people, you should have picked somebody else 

in Denver. I mean, the technology is to the point you just do not 

have it all implemented. 

Mr. COHEN. That is correct. 

Mr. FARENTHOLD. All right. And then, I also wanted to go back 

to—actually I will stick with you for a second, Mr. Cohen. Do you 

see the increase in video traffic on the network going up? Do you 

see a shift from this model of where you are watching TV in real 

time to where you are pulling something from Netflix, and where 

the entertainment program becomes more on demand? And does 

this help or hurt your bandwidth issues? 

Mr. COHEN. All right. So, so far what we are seeing, we have to 

break this down in a slightly different way I think. We are seeing 

tremendously increased utilization of online video services, but we 

are not seeing a degradation in the amount of time that people 

watch television and watch video on demand, which is a part of our 

Title 6 cable service. So it has been—— 

Mr. FARENTHOLD. And I guess—— 

Mr. COHEN [continuing]. More a growth of the pie than a difference in a share of the pie. 

Mr. FARENTHOLD. And I guess my point is, in making program 

decisions and operating in the public interest, I know that is kind 

of an archaic term in FCC lingo. But sports programming, news 

programming, stuff that needs to be live, it seems like there ought 

to be more availability in bandwidth on your cable dedicated to 

that sort of programming as opposed to stuff that you could get 

through alternative methods on demand that is not as time sensitive. 
178 

We could go into that, but I am out of time. I did want to suggest 

that that be something that would be considered, and it might be 

something that the FCC—— 

Mr. COHEN. The very quick thing I will observe—it is the second 

time you made reference to this—is please do not underestimate 

the amount of sports programming in particular that is now available online. So Major League baseball has a package or online. You 

can watch any Major League baseball game. NBA, the same thing. 

NCAA playoffs was all available online as well as on television. So 

it is just something that goes into your thinking. 

Mr. FARENTHOLD. I just love my Longhorn Network. I love my 

Longhorn Network. Thank you very much. 

Mr. COHEN. Thank you. 

Mr. BACHUS. Thank you. There was some reference to speed, and 

of course that depends on the distance of that last mile. So, you 

know, sometimes you are comparing two different other type of 

wires. So what may be true in one case is not true in another. At 

this time, I recognize the Ranking Member, Mr. Conyers. 

Mr. CONYERS. Thank you very much, Chairman. I wanted to remind Mr. Cohen that a few years back, I asked you at our hearings 

whether your merger with NBCUniversal would not result in the 

loss of jobs. Has that been proven true? 

Mr. COHEN. I was actually hoping you would ask me that question because we had a long discussion about it. 

Mr. CONYERS. We did. 

Mr. COHEN. And I told you that it was a vertical transaction, and 

that there was no job loss to be expected. And I am very proud to 

report to you that if you look at the combined Comcast and 

NBCUniversal after 3 years, we are somewhere between 3,000 and 

5,000 more jobs than we had at the time we did the transaction. 

Mr. CONYERS. Excellent response, and I am happy that we had 

that discussion back then. It is still an important question. Attorney Grunes, in your view, how effective have the behavioral remedies imposed in the Comcast/NBCUniversal transaction been? And 

should similar remedies, in your view, apply in this case? 

Mr. GRUNES. Thank you for the question. Generally speaking, behavioral remedies are like regulation, and just like regulation, behavioral remedies often do not work. Professor John Kwoka has 

done a study, a retrospective. It is the most comprehensive one. It 

looks at price increases. It looks at all the factors that go into the 

success of behavioral remedies. 

There are problems with them. The problems can include evasion 

by the parties who are being regulated. I am not going to get into 

an argument with Comcast about whether it has or has not evaded 

certain of those remedies, but that is a problem. There is a problem 

with unforeseen circumstances. We have heard a little bit about 

that today in the sense of the remedies appear to cover the FCC’s 

open Internet order. But Comcast went outside of that allegedly 

and made issues out there. 

So my view is behavioral remedies generally are to be avoided. 

I am quite sure DoJ is going to look back since it has only been 

3 years since the NBCU transaction and the behavioral conditions 

were put in. They will look back. They will see what worked and 

what did not work. And my guess is that at the end of the day, 
179 

they are going to agree with me that the conditions they put in 

place were not adequate. 

Mr. CONYERS. And they are difficult to enforce. Sometimes they 

are so broad in scope that it does not take much to circumvent 

them either. 

Mr. GRUNES. They are difficult to draft. What is interesting to 

me is even in the recent airline merger, DoJ itself explained why 

behavioral remedies are not good when they explained why they 

would not accept some. It puts the government too much into a 

business. It puts the business at a different position than competitors. There are all those problems, including the drafting problem 

you have referred to. 

Mr. CONYERS. Yes. Now, one of the witnesses—I think it was 

Professor Hemphill—said that the combined Comcast is not likely 

to foreclose online video distributors because online video is an increasingly valuable part of the broadband Internet business. What 

kind of a response do you have for that inquiry? 

Mr. GRUNES. Well, Comcast is first and foremost a video company, and it is facing new competition from outside of its traditional business. According to the Department of Justice in the 

NBCUniversal complaint, Comcast took action against that new 

form of competition. And in my view, this merger only makes that 

more likely and likely to be worse. 

Mr. CONYERS. Thank you. My last question to Mr. Schaeffer is, 

the suggestion that we have heard that Comcast Internet interconnection agreement with Netflix is a sign America is working 

well. Is that necessarily the case? 

Mr. SCHAEFFER. I would argue it is a market that was distorted 

due to monopoly power. Netflix entered that agreement because it 

was the only way it could provide connectivity and content to its 

customers. Comcast controls the only pipe to those customers, and 

Netflix had to pay the toll to get to those customers, ultimately 

raising its prices. 

Mr. CONYERS. Thank you. Mr. Chairman, I appreciate the time. 

Mr. BACHUS. Mr. Conyers, as always, I appreciate your thoughtful questions. At this time, we recognize the gentleman from Missouri, Mr. Smith, for 5 minutes. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. Mr. Cohen, 

why does Comcast charge some parties for interconnection agreements and offer others transit without compensation? 

Mr. COHEN. So the structure of that interconnection market, 

which, by the way, I will answer the question, but the same answer 

would apply to everybody else in the ecosystem. So the structure 

of that market is that when traffic is in rough balance between an 

ISP like Comcast and a transit provider, then there is what is 

called settlement free peering. That is, if we are sending roughly 

the same amount of traffic to a Level Three as Level Three is sending to us, there is settlement free peering. When the traffic goes 

out of balance, the industry convention, and this is an international 

convention that applies among dozens and dozens—hundreds of 

transit providers and ISPs around the world, then there is cash 

compensation for the extra traffic. 

So just by way of example, Cogent and Comcast had a settlement 

free peering arrangement for many, many years. It was only when 
180 

their traffic went out of balance—and it did not go out of balance 

by 5 percent or 10 percent. We were in roughly one-on-one balance 

in terms of the traffic we were sending to each other. It went out 

of balance by 500 percent. Cogent started sending us five times as 

much traffic as we were sending to them. And that triggered the 

need for a discussion of the negotiation about moving to a form of 

a paid peering relationship. 

Mr. SMITH OF MISSOURI. So it is only when it is out of balance. 

Mr. COHEN. Correct. 

Mr. SMITH OF MISSOURI. Okay. Mr. Schaeffer, some of your relationships with interconnection counterparties involve payment. 

Others do not. Is there a clear understanding regarding the degree 

of traffic flow that needs to change before a relationship switches 

from a free transfer to a paid transfer? 

Mr. SCHAEFFER. So, in fact, Cogent does not pay any party globally for connectivity. We have two forms of connectivity. We have 

approximately 40 settlement free peers in which no monies change 

hands. And secondly, we have approximately 5,100 networks that 

buy full Internet transit from us. They are our customers. We do 

not sell a paid peering product. We do not buy a paid peering product. 

I would also like to respond to a comment that Mr. Cohen made. 

No traffic went to Mr. Cohen’s network that was not requested by 

his customers. Secondly, his network is asymmetric in its architecture. He sells a product that has greater download speed than 

upload speed. So, therefore, it is virtually impossible for any network to be in balance. 

It was an interesting statement in Mr. Cohen’s preparation that 

he claims that the overwhelming majority of traffic destined to 

Comcast customers goes through settlement free peering, but yet 

he outlines this requirement for ratios. It is impossible for our network or any network to meet that test. 

Mr. SMITH OF MISSOURI. Okay, thank you. Mr. Cohen, do you 

want to respond to that comment? 

Mr. COHEN. Yes. It is inaccurate. Comcast has settlement free 

peering arrangements with 40 companies, which means that for 

those 40 companies, the traffic roughly is in balance. And again, 

our traffic was roughly in balance with Cogent at one point in our 

business relationship. 

Mr. SMITH OF MISSOURI. Okay. Mr. Polka, can you explain how 

the National Cable Television Cooperative operates to purchase 

programming and how it may be impacted by the Comcast merger? 

Mr. POLKA. Happy to. Thank you, sir. The National Cable Television Cooperative is a partner organization for our member companies, our 800 to 900 member companies in smaller markets in 

rural areas. And they operate by working together collectively for 

our members to negotiate programming agreements. Within that 

membership include companies that are competitive to both 

Comcast and Time Warner, such as RCN, Grande, Wave 

Broadband, Wide Open West, and others. 

What the coop does is it works to collectively negotiate a master 

programming deal for our members because otherwise if you have 

companies of 1,500 median size, it is very, very difficult as one 

small company to go out and negotiate major programming agree-
181 

ments with Viacom, Disney, Comcast, NBCUniversal, Fox, and otherwise. So the NCTC provides that benefit to smaller companies in 

the acquisition of programming, and that is basically the operation 

of the NCTC. 

Mr. SMITH OF MISSOURI. And how it will be impacted from the 

merger? 

Mr. POLKA. How it will be impacted is as a result of the size of 

Comcast/Time Warner after the merger. When we talk about combining distribution assets of both Comcast Cable and Time Warner 

Cable, they will be a much larger cable company. And as a result 

they in their own negotiations with those same programming vendors that I mentioned will have the ability and the leverage in the 

marketplace to lower their wholesale costs of programming. 

That will impact the cost of programming to NCTC and our 900 

smaller member companies that purchase programming through 

NCTC in two ways. Number one, as Comcast/Time Warner is able 

to lower its wholesale price, the disparity between what Comcast/ 

Time Warner pays and what our members pay will be greater. 

There is also the possibility and the likelihood that as a result of 

this transaction, other programming providers may be asking for 

higher prices to offset lower prices paid by Comcast/Time Warner. 

Mr. SMITH OF MISSOURI. Thank you, sir. I see my time has expired. Thank you, Mr. Chairman. 

Mr. BACHUS. Thank you. Thank you, Mr. Smith. At this time, 

Mr. Jeffries is recognized for 5 minutes. 

Mr. JEFFRIES. Thank you, Mr. Chair, and thank you for providing this opportunity for a second round of questioning. And 

thank you certainly to the witnesses for your patience, your 

thoughtful testimony, and your indulgence. 

I wanted to just explore some thoughts connected to the testimony provided by Mr. Hemphill. I believe that in your testimony 

you stated that the combined Comcast is not such a must-have that 

it gains a competitive advantage with programmers. Is that an accurate representation of what you testified to? 

Mr. HEMPHILL. It is that. 

VOICE. Turn your microphone on, please. 

Mr. HEMPHILL. Nearly so. It is that the combined entity will not 

be such a must-have that it would generate the kind of bargaining 

power that would break a programmer’s scale, and thereby give 

rise to concerns about losses on that side. 

Mr. JEFFRIES. So Comcast now has, I believe, 22 million subscribers, correct? And I gather—— 

Mr. COHEN. That is correct. 

Mr. JEFFRIES. Thank you, Mr. Cohen. And Time Warner has 

about 11 million subscribers, is that correct? 

Mr. MARCUS. Correct. 

Mr. JEFFRIES. And then if this transaction were to be approved, 

I believe because of the sell-off, there would be approximately 30 

million subscribers with the combined entity? 

Mr. COHEN. Actually it will be 29 million given the divestiture 

announcement that we made last week. 

Mr. JEFFRIES. Okay, thank you. So I think one of the things that 

I am trying to work through and perhaps other Members of the 

Committee are trying to figure out is, what is the appropriate legal 
182 

landscape through which we can interpret what an appropriate or 

an inappropriate market concentration may be. And as Mr. Cohen 

appropriately pointed out, you have got two D.C. Circuit Court 

opinions indicating that the 30 percent number was perhaps an arbitrary number, and that there was no reason for us to believe that 

the public interest may be adversely impacted. And then as Mr. 

Conyers correctly pointed out, there was a Supreme Court decision 

several decades ago, but it is still good law as far as we have been 

able to determine, albeit in the banking context, United States v. 

Philadelphia National Bank, that stated ‘‘A merger resulting in 30 

percent of a market trending toward concentration in which four 

firms controlled 70 percent of the sale was presumptively illegal 

under Section 7 of the Clayton Act.’’ 

Could you provide us with some clarity as to where you think 

things stand, and perhaps Mr. Cohen can weigh in as well as Mr. 

Polka. 

Mr. COHEN. Why do you not go first, Professor? 

Mr. HEMPHILL. So I would be happy to react to that. I think 

Philadelphia National Bank, the old Supreme Court case, is a useful starting point. This is an opinion written by Dick Posner, my 

old boss, when he was a law clerk for Justice Brennan. In the 50 

years since, we have learned a lot about how to think about market 

power both on the sell side and also as relevant here on the buying 

side. 

And so, one thing you need to recognize, I believe, is that the 

buying side is really different from the selling side. It is not a game 

where we are worried about changing the price and thereby changing the quantity. We are instead thinking about bargaining power, 

and the FCC spent a lot of time thinking about bargaining power 

in the context of programming markets. And although there is no 

hard and fast rule that we can hold onto and say with economic 

certainty this is the right answer, we do have from the FCC their 

best shot, which, one, the D.C. Circuit has said not merely is arbitrary, but was too aggressive, was too conservative, and which 

marks the time six or 7 years ago when the market was somewhat 

different. I think it is clear that the competition has increased. 

Mr. JEFFRIES. Thank you. Let me just let Mr. Polka react quickly 

to that. 

Mr. HEMPHILL. Sure. 

Mr. POLKA. I would say this as it relates to the 30 percent. I, like 

Mr. Cohen, am a recovering lawyer, so I cannot speak in detail 

about—— 

Mr. JEFFRIES. As are many of us. 

Mr. POLKA. Exactly. Proud to be one. Cannot speak directly to 

the antitrust implications specifically, but as I said in my testimony and in my oral comments, this merger is about three different parts. It is not just a horizontal merger. We have programming and programming assets being combined. We have Comcast 

programming combining with new distributions. And we have the 

impact of what happens when Comcast distribution is combined 

with Time Warner cable distribution. 

And as I was mentioning to Mr. Smith, there is an impact on the 

30 percent approaching that where a company that approaches 

that size has enough leverage in the marketplace to be able to af-
183 

fect its wholesale programming costs that ultimately impact other 

direct competitors like RCN, Grande, and others. 

Mr. JEFFRIES. Thank you. Mr. Cohen? 

Mr. COHEN. So I am going to do quick things in respect of the 

time, which, first of all, I think Professor Hemphill made the basic 

point. I want to return to something that Mr. Grunes said earlier, 

which is it depends on the market. And the advantage we have 

with these two D.C. Circuit cases is that they dealt with this precise market. That is what they were looking at. 

And they were also dealing not with the horizontal issues, but 

with the vertical issues that Mr. Polka referred to. And in reaction 

to their decision, although I fully agree with what Professor Hemphill said, I want to quote what Professor Christopher Yoo from the 

University of Pennsylvania has observed about those decisions, 

which is that ‘‘They represent a potentially insuperable obstacle to 

claims that allowing the transaction to proceed would adversely affect this market.’’ ‘‘Potentially insuperable obstacle.’’ 

So I am very comfortable, and we are going to be under 30 percent by the way, not 30 percent, not over 30 percent. I think the 

express concerns of the sky is falling and the world is going to end 

as we know it are simply not supportable under the law. 

The second things I just want to say quickly because I know folks 

were in and out. Mr. Polka continues to say that we are going to 

be able to extract lower programming costs. I wish we would. By 

the way, that would result in lower prices for consumers, which a 

lot of people are interested in. But that if we do that, competitors 

of ours are going to have to pay higher programming prices. 

I covered this earlier. Professor Hemphill covered this earlier. It 

is an attractive comment. It just does not have any support in antitrust law or antitrust economics. That is not the way the markets 

work. 

Mr. JEFFRIES. Thank you. I yield back. 

Mr. BACHUS. Thank you. We are going to wrap this hearing up 

with Mr. Collins and me because we want to try to get out of here 

at 1:30. It may be two or 3 minutes past that. Mr. Collins? 

Mr. COLLINS. Thank you, Mr. Chairman. One of the best things 

about these hearings and especially ones like this, and some of the 

best results of the some of these hearings is actually having experts or ones who put themselves out as experts in certain areas. 

Being able to share not only with our questions that we have, but 

I like to put you basically, and I have to run for office and I have 

to do debates, so guess what? We are going to debate. 

Mr. GRUNES AND MR. Hemphill, you are not off the hook. Mr. 

Grunes, would you please succinctly state or list specifically antitrust theory under why this merger may violate antitrust law? Mr. 

Hemphill, I would highly recommend you write these down because 

I am going to ask you to rebut them. [Laughter.] 

Input foreclosure, customer foreclosure, and bargaining theory. 

Mr. COLLINS. That is a little more succinct than I like, but we 

will go on from there. [Laughter.] 

So I may come back to you if he needs that. 

Mr. HEMPHILL. Right. So the more succinct from him, the harder 

for me I think. 

Mr. COLLINS. You are learning quickly. [Laughter.] 
184 

Mr. HEMPHILL. With respect to the buyer power theory—that 

was one of your three, right? These are the three from the testimony, right? 

Mr. COLLINS. Right. 

Mr. HEMPHILL. Right. With respect to buyer power, I think that 

is wrong for the reasons we talked about before. The testimony 

itself—this is page 13—relies as its essential example on a quantity 

increase premised on a decrease in price. Unless you are in a market where you have a strategy of decreasing quantity in order to 

drop the price, this part does not hold. You know, there still might 

be a bargaining theory, but that is not an antitrust theory necessarily. You are going to need to do some more work to get there, 

and I do not hear that in the testimony itself, but we have already 

talked about that, I think, to some degree. 

With respect to input foreclosure, you know, ultimately this is a 

comment within the testimony I think on regional sports networks 

in the main. I have not made a close focus of the, I believe, four 

different narrow localities in which that particular form of input 

foreclosure takes place. I think there are some general economic 

reasons for skepticism. But in any event, I think there as a comment before about something not being a headline issue. I think 

that is not a headline issue. 

Finally, and I think most importantly, when we think about the 

antitrust issues, since there is not head-to-head competition, there 

is still a question of foreclosure. And we have spent a lot of time 

trying to think about the incentives and consequences of foreclosure incentives. The fact that the broadband is a profitable and 

increasing business reduces, though not to zero, it reduces the incentive to engage in foreclosure. And then you need to think 

through the very large number of different stories that an economic 

theorist can devise to tell a foreclosure story. You know, I get at 

a few of these in my testimony. Other folks have done exhaustive 

looks at that. 

I think the most important one that we have been talking about 

has been with respect to Comcast/Netflix, roughly speaking. The 

fact that they did a deal both illustrates the workings of the market and tends to undermine the worry that this would be an instrument of foreclosure. 

Mr. COLLINS. Thank you. Mr. Grunes, any rebuttal? Mr. Grunes? 

Mr. GRUNES. I will submit something, if I may. 

Mr. COLLINS. Well, I am going to ask the question. Submit in 

oral at this point, if you would. And I am not trying—— [Laughter.] 

And I am not trying to be hard, but it is just very difficult because Members may or may not be able to see written response. 

They may be watching in their office right now, so even if it is 

brief. And if not, if you choose not to, I will not—— 

Mr. GRUNES. Okay. So just briefly to go back to the Netflix example, the argument there is, and Comcast has made the argument, 

the market is working because Netflix paid for interconnection. 

Netflix’s response was we were getting so degraded on Comcast, 

and they have a nice visual on what was happening to the quality 

of their service, it was going down lower than HD, lower than 
185 

DVD, down to the VHS level, that they felt they had to do something about that. 

And as a Netflix subscriber, I can tell you I would drop Netflix 

in a case like that before I would switch my Internet provider, and 

Netflix obviously understands that, okay? The fact that they paid 

and that their CEO then said Comcast is extracting a toll or a tax 

on us, we can afford it, others behind us cannot, I think tells a legitimate antitrust theory. 

Professor Hemphill and I may disagree on this, but I think it is 

very much a similar theory to the Microsoft theory that the DoJ 

litigated. The difference here, because this is a merger, is that 

under Section 7 we are under an incipiency standard. You do not 

wait until they are monopolist. If this merger looks like it may be 

anti-competitive, you nip it in the bud. 

Mr. COLLINS. Well, I do appreciate both of you. Thank you for 

your answers. I think it provides some insight that you do not normally get on direct questions, and I do appreciate it. Mr. Chairman, I yield back. 

Mr. BACHUS. Thank you. Mr. Grunes, you are a Netflix subscriber. Do you watch House of Cards? [Laughter.] 

Mr. COLLINS. Mr. Chairman, are you going to imply something 

there? Do not go to the metro. [Laughter.] 

Some of the audience—— 

Mr. GRUNES. Under advice of counsel, I will not answer the question. [Laughter.] 

Mr. BACHUS. We are waiting on Frank Underwood to get here, 

but I do not know. Two questions, and this will be the last two 

questions of the hearing. And I will ask Mr. Marcus or Mr. Cohen. 

Mr. MARCUS. I was starting to feel neglected 

Mr. BACHUS. There have been allegations that Comcast may exclude competitors from advertising interconnects that it operates. 

And after the merger, some commentators assert that Comcast will 

control approximately 82 percent of the top 50 urban advertising 

areas in the country. Can you provide assurances that Comcast will 

not exclude competitors or advertising firms from the advertising 

interconnects that Comcast operates? And I think Mr. Issa also expressed some concern about that. 

Mr. MARCUS. Clearly your question. 

Mr. COHEN. Thank you. So, Mr. Chairman, let me answer the 

question. 

Mr. BACHUS. Well, that is just fine and probably better because 

Mr. Marcus—— 

Mr. MARCUS. I would be happy to give the assurance, but I 

am—— 

Mr. COHEN. It sort of goes to our conduct. 

Mr. BACHUS. Yes. 

Mr. COHEN. It also gives me an opportunity I think to correct the 

record on some of the things that have been said with respect to 

advertising. So I do not think it is relevant what the percentage 

of control of interconnects are that Comcast would have or of NCC, 

which is our national advertising cooperative. You usually have to 

start with the intensely competitive nature of the advertising market, so that advertising market is a $72 billion market, of which 
186 

cable in the aggregate has about $5 billion. So we are about 7 percent of the advertising market. 

So even assuming that we are going to control 82 percent of the 

cable advertising market, which I do not think is accurate by the 

way, but we will be controlling 82 percent of 7 percent of the market. And I do not think that present serious or cognizable antitrust 

risks or harms. Advertisers have massive other opportunities to be 

able to reach their eyeballs what they need. We are in the business 

of selling advertising. We are not in the business of excluding businesses who want to buy advertising from us. 

And it also gives me an opportunity just to add two sentences on 

something in my oral testimony because the original question 

around this was a small business question, which is one of the 

huge pro-competitive impacts of this transaction is to make our 

combined company a much more effective business competitor in 

small- and medium-sized business sector. So we are going to bring 

big benefits to those businesses, and we are not going to take away 

any advertising opportunities that they have today. 

Mr. BACHUS. So your short answer is that you are not going to 

exclude competitors or advertising—— 

Mr. COHEN. Correct. 

Mr. BACHUS [continuing]. From the interconnects. 

Mr. COHEN. Correct. 

Mr. BACHUS. Okay. All right. You were considering whether to 

add an independent programmer to Comcast Network. Does 

Comcast consider whether the independent programming content 

would compete with Comcast-owned content? I know there was 

some mention that it was Rural Network, that you own 8 percent 

of them. You said that fact does not weigh in. 

But how can you ensure that that is not a consideration? I mean, 

it just seems like it has to be in your pecuniary interests as something you have an ownership in. 

Mr. COHEN. So I was going to say before you added that last 

comment, in view of the lateness of the hour, I am finally going to 

be able to give a succinct answer and say we do not, which is the 

answer to the initial question. We do not consider whether a new 

programmer is competitive with an existing piece of NBCUniversal 

programming. The way that is enforced is through the program 

carriage rules of the Federal Communications Commission, which 

legally prohibit us from discriminating against unaffiliated content 

because of affiliated content that we have. 

And in response to your last question, I mean, how is it possible 

to separate that, the reason we can separate it is because you cannot assume that any particular subject matter that a channel leads 

into is only a matter of further dividing the pie. So let us take 

news as an example. If you have 100 people who watch news today, 

and we carry 10 news channels, and one of them is owned by us, 

and it is getting, let us say, 10 viewers of those 100, if we were 

to add another news channel, it does not mean that only 100 people 

are still going to be watching news. Our goal is when we add channels that more people want to watch. And so now, maybe we have 

110 people watching news, and we are not losing any viewers from 

the news channel that we own or from any other news channel that 

we have on the network. 
187 

So we are trying to make our programming more attractive, more 

compelling, get more customers. It is not a zero sum game that if 

we put this network on that is sort of in the same genre as the network we have, we are going to lose customers. 

Mr. BACHUS. Thank you. Would any of you gentlemen, Mr. 

Schaeffer, and Mr. Grunes, or Doctor, would you all like to respond? Any counter points on that? 

[No response.] 

Mr. BACHUS. Okay. All right. That is a good place to stop. Mr. 

Gottsch? 

Mr. GOTTSCH. I would like to add one thing. Congressman Smith 

was asking about the ratings, and in the extended statement that 

we made, we have the ratings for all 288 Comcast channels as part 

of that record for the May period. 

Mr. BACHUS. And Mr. Cohen did mention that some of those decisions are reconsidered, I do not know. 

Mr. GOTTSCH. We hope so. I mean, I came to Washington, D.C. 

here very concerned about Comcast’s attitude toward rural America 

and independents, and I am even more concerned now. 

Mr. BACHUS. I think that we are all problem solvers. We would 

not have gotten as far as we did. So I appreciate this hearing. This 

concludes today’s hearing. I thank all our witnesses for attending 

and for your patience. It was cooler at the end of the hearing than 

at the beginning, which is unusual. 

Without objection, all Members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

materials for the record, and that includes Ms. Jackson Lee, who 

was going to introduce something. But any Member that wants to 

submit anything for the record, and if the panelists wish to submit 

additional information for the record. 

Thank you. This hearing is adjourned. 

[Whereupon, at 1:37 p.m., the Subcommittee was adjourned.] 

(189) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Addendum to the Joint Prepared Statement of David L. Cohen, Executive 

Vice President, Comcast Corporation; and Robert D. Marcus, Chairman & 

Chief Executive Officer, Time Warner Cable Inc. 
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Material submitted by the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law 
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Material submitted by the Honorable Spencer Bachus, a Representative in 

Congress from the State of Alabama, and Chairman, Subcommittee on 

Regulatory Reform, Commercial and Antitrust Law 
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Material submitted by the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary 
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Letter from the Writers Guild of America, West (WGAW) 
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Response to Questions for the Record from David L. Cohen, 

Executive Vice President, Comcast Corporation 
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EXHIBIT 1 
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Response to Questions for the Record from Robert D. Marcus, 

Chairman and CEO, Time Warner Cable Inc. 

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Response to Questions for the Record from Matthew M. Polka, 

President and CEO, American Cable Association 
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Response to Questions for the Record from C. Scott Hemphill, 

Professor of Law, Columbia Law School 
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Response to Questions for the Record from Dave Schaeffer, 

Chairman and CEO, Cogent Communications Group, Inc. 
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