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Marlene H. Dortch November 26, 2014 Page 2
Question No. 4
Comcast has suggested that there is confusion in the record concerning its policies and practices with respect to authentication of applications and devices, including on the X1 and X2. Please elaborate on this subject.
Question No. 5
How do you respond to claims that provisions in Comcast’s programming contracts, including MFNs, ADMs, and other windowing provision raise concerns by making it more difficult for OVDs and MVPDs to obtain content on favorable terms?
Question No. 6
What is Comcast’s updated assessment of the efficiencies the merger is likely to create? How are these efficiencies merger-specific and verifiable and to what extent will they be passed on to consumers
Comcast submits herewith one copy of the redacted, public version of this filing. The
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symbols denote where Highly Confidential Information has been redacted and the
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symbols denote where Confidential Information has been redacted. A Highly Confidential version of this filing, which includes Video Programming Confidential Information in the responses to Questions 1, 2, and 5, has been submitted to the Office of the Secretary pursuant to the terms of the Modified Joint Protective Order in effect in this proceeding.
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Please direct any questions to the undersigned. Respectfully submitted, /s/ Kathryn A. Zachem Senior Vice President, Regulatory and State Legislative Affairs Comcast Corporation cc: Hillary Burchuk Enclosures
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Applications of Comcast Corp. and Time Warner Cable Inc. for Consent to Assign or Transfer Control of Licenses and Authorizations
, Second Amended Modified Joint Protective Order, MB Docket No. 14-57, DA 14-1639 (Nov. 12, 2014) (“Modified Joint Protective Order”).
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Question No. 1
How do you respond to claims that Comcast’s larger subscriber base will give it an enhanced incentive to engage in exclusionary conduct towards its rivals (e.g., raising their costs), since the benefits of such strategies could be recouped over a larger subscriber base?
Response to Question No. 1
Comcast understands that with any large merger competitive concerns will be raised and explored. As a matter of economics and marketplace facts, however, Comcast disagrees that a modestly larger footprint increases its incentive to engage in foreclosure or exclusionary conduct toward video distribution rivals. To the contrary, empirical evidence conclusively refutes this theoretical claim. There is no basis to conclude that Comcast’s modest gain in national share of MVPD subscribers (from approximately 22% to approximately 29%) will increase its incentives (much less its ability) to engage in exclusionary conduct toward actual or potential video distribution rivals.It has been suggested by various parties that the proposed transaction would increase Comcast’s incentive to engage in three principal “exclusionary” strategies: (1) foreclosure or other exclusionary conduct with respect to access to NBCUniversal content (“content foreclosure”); (2) exclusionary conduct involving “contracts referencing rivals” that have an anticompetitive effect (“CRR foreclosure”); and (3) foreclosure or other exclusionary conduct relating to OVD access to Comcast’s broadband network or subscribers. The theory is apparently that Comcast may have greater incentive to foreclose rivals because it will reap a slightly higher proportion of gains from exclusionary conduct if it serves 29% of U.S. MVPD subscribers rather than 22%. Under this theory, a larger MVPD has a better chance of “recapturing” subscribers who cancel their subscription with a rival, thus rendering foreclosure potentially more profitable. This theoretical claim finds no support in the documents or historical behavior of Comcast. To the contrary,
real-world evidence in the record refutes this claim
. As explained below:1.
Comcast’s Size Has Not Harmed Rivals:
Comcast is already the largest MVPD in the country and has been so for 12 years.If the premise of this question were valid, one would expect to see some evidence that Comcast has been more likely to engage in foreclosure or exclusionary conduct than other MVPDs. The facts refute this, however. Comcast’s actual and purported rivals have consistently grown over the last decade while Comcast has lost subscribers. And there is no evidence that Comcast has engaged in any of the categories of anticompetitive conduct identified, much less that it has done so more frequently than smaller MVPDs. 2.
No Content Foreclosure:
With respect to foreclosing access to NBCUniversal content, there are many reasons why this is not a concern, including: (1) there is strong empirical evidence that the immediate harm to Comcast’s programming business from any foreclosure strategy would exceed any purported benefit to its
