Univision CEO joins small, mighty group of Comcast merger critics

April 29, 2014

Univision's chief executive has joined a small but potentially influential group of business leaders who are criticizing Comcast's bid for Time Warner Cable.

Univision CEO Randy Falco said Monday that the combined firm puts too much power into the hands of one company. Univision competes directly with Telemundo, which is owned and operated by Comcast's NBC Universal. Combined, Comcast and Time Warner Cable would serve 91 percent of all Hispanic households as the top TV distributor in 19 of the 20 top markets. That's on top of the combined company's control of more than 40 percent of the broadband Internet market, through which more consumers are getting their video news and entertainment.

"Based on what I have seen and heard, I am still concerned that the proposed merger could be bad for competition and, most importantly, bad for Hispanic audiences," Falco said during a first-quarter earnings conference call. "The fact is that there is not one other media or telecommunications company that has the level of vertical integration of Comcast – I'm talking about video, broadband and content – not Google, not AT&T, not Facebook, not the satellite providers."

Update: Comcast responded to Falco's remarks, saying it distributes more than 60 Latino networks, both in Spanish and in English. The company said it also faces competition from telecom, satellite and online video firms.

It has argued to regulators and lawmakers that because Comcast and Time Warner Cable don't compete in the same markets, the merger won't knock out a competitor.

"We don’t compete for customers anywhere,"said John Demming, executive director of corporate finance for  Comcast. "We will not have undue power in negotiating with programming networks, and we have a great record of working with programmers from the largest to the smallest."

Few corporate executives in the television or Internet industries have expressed criticism about the merger, and lawmakers have said they fear Comcast's and Time Warner Cable's influence may be muffling dissent. Sen. Amy Klobuchar (D-Minn.) said in a hearing on the merger last month that independent television programmers have told her they are afraid to publicly criticize the proposal for fear of retribution from the nation's top two cable and broadband Internet service providers.

Falco joined a small cadre of critics, including Netflix chief executive Reed Hastings, who earlier this month spoke out against the merger. In a letter to shareholders, Hastings said Comcast and Time Warner Cable's combined power over the entire Internet and television ecosystems would be harmful for consumers. Comcast's demands from its business partners would also ripple across the industry, with other firms following the cable giant's lead, Netflix has argued. After much resistance, Netflix grudgingly agreed in February to pay Comcast fees for better transmission of its streaming videos. On Monday, Netflix agreed to a similar deal with Verizon Communications.

"The charges leveled by Netflix won’t be easily dismissed, if only because Netflix is such a visible and beloved company," said Craig Moffett, a senior analyst at MoffettNathanson Research. "At the very least, Reed Hastings has successfully ensured that the issue will be on regulators' radar screens."

But even as Comcast and Time Warner Cable attracted a new critic, they also quieted another. On Monday, Comcast quelled merger concerns held by Charter Communications, an early opponent of the deal, with an agreement to sell subscribers to the much smaller competitor.

"The FCC would clearly care what companies like Netflix and Univision think about the merger," said Paul Gallant, managing director at Guggenheim Securities. "Regulators understand that opponents sometimes have an ax to grind, but they also really value input from players who are actually in the arena with Comcast."

Cecilia Kang is a staff writer covering the business of media and entertainment.
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