Comcast trying to claim underdog status while seeking $45B mega-merger

Despite running the nation’s biggest cable company, Comcast has cast itself as the underdog.

In a pitch to regulators and lawmakers on Tuesday, the cable and Internet giant, led by CEO Brian Roberts, claimed it is caught in a lopsided battle against much larger telecom and tech titans and needs to combine with No. 2 Time Warner Cable to remain relevant.

Comcast said the cable business is under attack from the likes of Apple, Google and Verizon, and that the combined company would be competing with a number of global players that dwarf it in terms of market cap and revenue.

“The traditional boundaries between media, communications, and technology are obsolete,” David L. Cohen, Comcast’s executive vice president, said in a statement.

“The competitive ecosystem in which we operate includes companies with national and even global scale — like AT&T, Verizon, DirecTV, Dish, Netflix, Amazon, Apple, Yahoo, Google, and Facebook — who are competing with each other and us in unprecedented ways.”

The 175-page filing with the Federal Communications Commission came a day before Comcast and Time Warner executives were set to testify before the Senate about their proposed $45 billion tie-up.

The deal would create a combined entity reaching nearly one-third of the nation’s cable customers and 40 percent of Internet customers.

To deflect critics of consolidation and ever-rising cable bills, Comcast has pledged to sell 3 million cable customers to keep it under 30 percent of the market, even though there is no law that currently limits it.

The cable marriage would also unite two big content providers. Comcast is the parent of NBC¬Universal, which includes the flagship broadcast network, Universal Studios and cable channels including USA, CNBC and MSNBC. Time Warner Cable owns local sports and news channels including New York 1.

Nevertheless, in the FCC filing Comcast listed a litany of ways in which rivals are chipping away at its business, including:

  • Google plans to expand its ultra-high-speed Internet service to nine markets — eight of which are in Comcast or TWC areas.
  • Apple offers an online video service, Apple TV, and is developing a new set-top box.
  • Amazon is rolling out its own set-top box, Fire TV, to boost its Prime video business.
  • Netflix has more than 33 million customers in the US and 11 million internationally.

Comcast also pointed to telecom companies such as AT&T and Verizon, which have been eating cable’s lunch. Since 2009, the telcos have added 6.2 million subscribers, while the cable industry has lost 7.3 million video subscribers.

The filing hammered away at Apple’s hold on the video market as well, noting that “Apple iTunes viewers purchase over 800,000 TV episodes and over 350,000 movies per day.”

Of course, Comcast’s Universal film studio and its NBC TV division benefit from a portion of those sales.

In addition, Cohen, who is Comcast’s chief liaison in Washington, tried to reframe the debate over Internet-access issues.

While the merged company will control 40 percent of the nation’s broadband access, Cohen said it would be closer to 20 percent when wireless phone services and DSL were considered.

Although he sought to portray Comcast as a regional cable firm, under siege by global competition, Cohen defended the creation of a cable behemoth: “Sometimes big is necessary and good.”

Comcast’s filing set off a flurry of statements from dozens of activist groups — Consumer Federation of America, Consumers Union, MoveOn.org, the Parents Television Council — urging the FCC and the Department of Justice to scrutinize the deal.