>> it is a megamerger for the ages, comcast, the country's largest cable company is setting its sights on the number two player, time warner cable. the hall is millions of subscribers worth the and of dollars. ofthe haul is millions dollars and millions of subscribers. today, "bloomberg west" is going deep with a special report, comcast everywhere. quick live from pier three in san francisco, welcome to this special edition of "bloomberg west" and i'm emily chang.

comcast and time warner cable are defending their merger proposal on capitol hill today. there is a hearing of executives, antitrust experts, cable industry lobbyists and more as they try to get a grip on whether this deal could ultimately help or hurt american consumers. congress itself holds no power to approve or deny the merger, but it's important could help siu -- sway the two agencies making this decision, the federal commissions -- the sec and the justice department. the fcc and the justice department. i cannot only will the merger drive the new comcast -- >> not only will the merger drive the new comcast, but also its competitors. consumers will clearly be the beneficiaries. >> but former justice department alan groom painted a much different teacher. >> this merger is very likely illegal. the parties know it, and that is why they are here talking about

how they plan to fix it. but i'm here to tell you what it is illegaly and why the fix doesn't cut it. >> joining us now on capitol hill is bloomberg's yang yang. what stood out to you today? plex high, emily. -- >> high, emily. -- hi, emily. judiciaryan of the committee actually interrupted the panel early on to explain they were having air conditioning issues, to explain to viewers like us that if we notice any sweat it was not because they were on comfortable or stressing, but in fact, because it was hot. that was a clarification he felt was important to make and they all had a good laugh about it, but the laughter ended there. not to say the grueling was all that intense as far as the hill hearings go, which could be explained by the fact that many of the committee members do get

political contributions from comcast. but that aside, as you said, this issue is not for them to approve or deny. they were there to figure out whether this is good for consumers. the executive vice president of comcast made his argument. >> the ultimate beneficiary of this enhanced opposition and greater investment is the american can tumor, specifically -- the american consumer. specifically, there will be faster internet speeds, more programming choices, more robust wi-fi, and our best in class x one operating system. and business customers will benefit as well. >> the other big argument he's made today is that this does not not competition and there is geographic overlap between time warner cable coverage and comcast coverage. >> but the no competition argument did not fit well with some of the other -- sit well with some of the other

witnesses. >> that is right. there were several witnesses, many of them against the merger. we had several groups, all different stakeholders with skin in the game. alan groom is the former doj antitrust official actually's is thelan grunes former doj antitrust official and he spoke out against it. >> 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. plex that was his take on the merger. again -- >> that was his take on the merger. no decision yet as to whether there will be a deal or not. >> thanks so much. how massive which a merger be? from the size and scope of the deal to the ripple effects across multiple industries, jon

erlichman helps us break down the multibillion-dollar merger by the numbers. >> it is a $45 billion deal that would combine two of the largest cable companies in the u.s. is bidding to buy time warner cable and it is more than 11 million customers -- and it's more than 11 million customers. adding to that, comcast 22 million video subscribers. sell or spin off nearly 5 million subscribers as part of the deal. but the combined comcast-time warner would still be the biggest cable operator with about 30 million customers, reaching nearly one in three american homes that pay for television. already dominant on the west coast, the merger would also affect the mass in new york, ohio, and texas. and the deal is about internet service, too. million --t one $20 20 million broadband subscribers and with time warner cable, it would control in the -- nearly

one third of the broadband cable market. >> i want to bring in our editor at large, cory johnson. ,nd also with us from the sec michael copps -- the f c c, michael copps. michael, i will start with you. how would you vote on this and why? >> i would vote without hesitation a loud and clear "no." it is a disaster for consumers and for people who are paying cable bills. it is a disaster for people paying broadband bills. it will send the broadband martin -- market down a monopolist to grow that the country cannot afford and it is consumer in this country because it is a conglomerate of distribution and what people will see or not see. this is too much power, too big

for any company to be exercising in the united states of america. cory johnson, described the lobbying efforts in this case. >> i've never seen anything like this. comcast has been working in the halls of washington for a long time, developing a great deal of power there. and indeed, a lot of former and future comcast employees work in the very government organizations that will be deciding this kind of thing. michael, you talk about in terms itbusiness -- just because take it is bad? -- just because it is big it is bad? what specifically could happen with this merger that has not happened already? >> if they go through, you lose competition. it is ludicrous to argue that this is not anti-competitive when you take that in enormous footprint that comcast achieved in the nbc universal and all of the properties and content that they own, and now you will impress that footprint on the rest of the country.

how in the world does that encourage competition? to a got to get back median in byron it in this country where we have some environmenta median in this country where we have some localism, independent producers of content and news. all of those things will suffer with this merger. and i don't just blame the companies involved, but also the government, particularly the federal communications commission where i set for 11 years for blessing so many of these mergers and downplaying that the agency should have at its heart. >> they also say if apple and google compete everywhere, why can't comcast? >> i don't think anybody should be able to have that kind of power. about theng anti-competitive aspects of it,

there is no question this is anti-competitive across the country. and the telecommunications act, i think, encourages competition and i think the expectation of consumers in the broadband and digital age is also to encourage competition. if we are going to let this opportunity creating infrastructure of the broadband go down the same road as radio and tv and cable with consolidation and gatekeeper control, that is a tragic denial of the opportunities of broadband and is amassing too much power into too few hands that are capable of doing too much damage to too many people. >> michael, you talk about the pernicious impact this could have on consumers. is very similar pernicious impact on business? >> yes, i think there is. powerpanies are given where they can discriminate -- you know, we have this internet that is mixed up with this

merger, too. give fastmoths can lanes to one percent and slow lanes for the 99%, or give fast lanes to maybe their own friends and affiliates and give bloomberg a slow lane -- how is that good for anybody? >> michael, how do you expect this fcc to vote on this merger? >> i hope they will take a good, close look at it. it should not take too long, because i think on its face it's just really to give us -- it's just ridiculous. at as you point out, there's tremendous amount of lobbying and advertising and money going into this. there is a long history at the fcc of the majority favoring consolidated deals. it is still uphill. analysisin the final will determine the outcome of this, even though we are talking about an independent agency in washington, is how the american people feel about it. i think we are now seeing a lot

of the spec, a lot of blowback against this deal. people are not enamored with their cable producers. they are not thrilled about seeing this brought band go down -- broadband go down the road of gatekeepers. i think we will see a tremendous push not to allow this consolidation. and also in this other open proceedings to guarantee the openness of the internet to the so-called net neutrality issue. >> not that anybody has ever been enamored with the cable guy. we will talk about that later in the show. thanks, michael copps, former fcc commissioner joining us from washington. the comcast merger is not the only big issue on the fcc's docket. some also say the freedom of the internet is also at stake. find out how and what comcast and to gain. next, on this special edition of "bloomberg west: comcast everywhere." ♪

>> i'm emily chang. welcome back to our special edition of "bloomberg west: comcast everywhere." more than 100 technology companies, including heavy hitters like amazon and facebook have spoken out against being charged extra fees for faster service. google favors net neutrality. cory johnson has more on how this net neutrality argument factors into the broader thing of what is going on with comcast and time warner. >> as i always say, i don't care about people, but businesses. net neutrality is about innovation. it's about the ability to invent stuff and the same -- and have the same speed as every other competitor to the customer. check this out.

but al gore did not invent the internet -- >> al gore did not invent the internet, but he did invent the phrase "information superhighway." to understand this metaphor, let's take a drive. guzzling vehicles like steve mcqueen in 1978, a metaphor for a video pulling out of the parking lot. we hit the interstate with the internet. by companies like at&t, etc. all of our fellow travelers are going at the same fast speed. but that last mile is owned by a small group of service providers like comcast, time warner cable, and verizon. and they all have different rules of the road. we may have gotten off the

information superhighway at a blazing fast speed. now we are hitting traffic. s upwhile the traffic jam some of our fellow travelers, other travelers like 18 wheeler monster truck pay for their own lane. that is what comcast and others due to allow there can -- their consumers get faster service. is it fair? could a fact all of the drivers on the road in that last minute -- last mile. writers doike cable not like that. and consumers want to enjoy the open road. >> here to talk about how you neutrality factors into this deal is a founding partner at true ventures. this is an industry that you've been following for decades. you say it is all about broadband, not video.

why? >> if you look at how we consume video, it's all over ip and all over broadband. yesterday, nielsen came out with a report saying the average u.s. home gets about 190 channels and youonly watch 17 and as look to the future, they will be watching many of those channels over broadband because it's the best way to distribute video. and moreover, the broadband part of the business is actually more lucrative for a company like comcast. they spend literally no money on get a huge and they amount of return for the same amount of bandwidth, the same amount of frequency. 2-4ink they need about channels to get 30 megabits of

bandwidth. and they charge close to $50 for it. and in the same frequency they have four channels. it's just harder set. >> do you think comcast was looking out a few years later and saying, hey, we might have 300 channels we could put on cable right now, but we will have 1000 channels going across our broadband and we will control it? >> we have to stop thinking channels. we have to start thinking in terms of whether there will be programs people want to watch. i think they will use broadband for that. we are not having that today, but we are going out and -- down that track. -- going down that track. with time warner cable and comcast together, 30 million customers, that is a bigger deal for them. and you juxtapose that with the net neutrality argument, which they can basically charge whatever they want.

this is a cash pressure that they will have -- a cash crusher they will have. it is pretty interesting, right? there is a merger going on and there is talk about changing net neutrality rules. it makes you wonder why we are talking about it right now. mark andreessen responded to one of your arguments on ttter saying, in an ideal world i want both net neutrality and a fast growing world in existing and new networks. not obvious how to square the circle. how do you square the circle? >> by opening up the competitive landscape. forcing comcast and time warner to not be in the business of owning content. they should be pacified as transport services. he could either provide cable

infrastructure or they can provide whatever channels they own. good point.a the cable guys have a different set of rules on them than verizon and at&t because of the resort nature of verizon and at&t, not because the service is much different. >> the phone companies are also trying to do the same thing. they are trying to roll out similar cable-like services and they all want and then to and because they can impose the old-fashioned telephone system economics on this. the cable guys want to charge you for everything from carriage to access. and the phone companies want to charge you for permanence. point -- stamp standpoint, we need a more competitive landscape. them as a classify transport service. we need to make sure that the content and types are separated. ad we could make it like utility. i mean, it is a utility and it has to be treated like one. that way, if you want more compilation, people could use

smart technologies in the competitive offering. >> much more with metzl -- om malik after this quick break. coming up, how will start ups affect innovation? more coming up on this special edition of "bloomberg west: comcast everywhere." ♪

>> welcome back to the special edition of "bloomberg west: comcast everywhere" and i'm emily chang. if you are just joining us, we are talking about the impact of the potential comcast-time warner cable merger. we are joined by om malik. start by talking about

innovation and how you feel a deal would impact that ecosystem. >> the impact will be when net neutrality is broken and companies like comcast can decide whose traffic flows faster on their network. the future, for instance, the next google or the next instagram or the next twitter comcast too pay to be successful. it is like they are acting like the mob. >> more than one third of all internet users in the u.s. will go through comcast or time warner. ofve only got a couple seconds here, but the internet is not he will now. equal now. >> it isn't, but the floats the odds against -- loads the odds

against startups even more. i think we should be very worried about that in an innovation economy. >> om malik, thank you. we will be right back with our special edition of "bloomberg west: comcast everywhere." ♪

but you are watching a special edition of "bloomberg west: comcast everywhere" covering the potential impact of the comcast-time warner cable merger. i'm emily chang. today, we are looking into the massive media merger that could change the landscape of the cable and broadband industries as we know them. the proposed deal could give comcast control of 38% of all broadband customers in the u.s. what does this mean for the hollywood and silicon valley players bringing content to you online? bloomberg news reporter admittedly joins us from -- edmund lee joins us from new york and we are also joined by

jon erlichman and cory johnson. edmund, i will start with you. what impact do you see on the media players out there -- apple, google, amazon, facebook echo -- facebook? sellsknow that comcast video around the country, but they are also broadband service providers. that means netflix, facebook, google, all of the companies delivering broadband data through these feeds, their relationship to time warner cable-comcast, this new behemoth, is in question. there could be new charges for better access to these broadband pipes. that could have implications for all of the big content companies out of silicon valley, how they do business with this new combined company. >> i don't really understand how disney tries to get an increase on what they get hate to espn

and how that might change. espn is the most valuable property in all of cable. >> i don't think it is going to change. the disney ceo when this yield was first announced and how it would affect him -- this deal was first announced and how would affect him, he basically said it was not. disney is in a pretty good spot. is aboution, really, those less viable channels -- less valuable channels. the fishing channel or low level cooking channel that nobody really wanted to watch in the first place, way the -- whether they could keep these areas involving cable packages. but there is no doubt that the high-end programming will continue to command these high prices, so much so that the cable bills may continue to climb. one thing we talked about all

the time is why netflix is so popular with people frustrated with paying the cable bills. it is in part because the broadcasters are pushing these prices on the customers. and if you've got these, you have more leverage than the cable networks. productionbig companies have not spoken out about this at all. on the other hand, netflix has come out very much against this deal. and they are the only one that has a payment deal with comcast. netflix saying in a statement that comcast is already dominant enough to capture unprecedented fees from providers like netflix. moret could provide even leverage to charge arbitrary interconnection tolls for access to their customers. for this reason, netflix opposes this merger. why go out on a limb like that? >> that is a good point.

but let's put this in better perspective. as john points out -- as jon points out, disney and the others have said it's going to be fine, whereas you have company like netflix complaining about the deal. but if you take a step back, disney, viacom, 20th century fox , they get paid by comcast, who picks up their content. whereas netflix pays comcast for these interconnection fees. of course netflix is going to complain about it. and companies like disney and cbs and foxx will be quieter since they are being paid by these guys. it is important to understand the context and why publicly one --e has said one thing and one side has said one thing and the other side is complaining. but netflix brings up a good point. when you have a company that has 30% of connections to all u.s. subscribers -- 38% of connections to all u.s. subscribers, that's a lot of power. i also wonder about culture.

the old businesses in hollywood know that you don't criticize the people you do this with in public. but netflix is a newer, younger, silicon valley company that is brave enough to do a deal on the one hand, but they also want to have access and do not want to have to do these deals in the future. but i would put netflix in the fatty bucket. -- >> i would put netflix in the saavy bucket. they placed a team here and were very friendly with the various content creators. you seem with programming like "house of cards" they are willing to play -- pay a lot of money. they did not treat themselves like outsiders. i think netflix is speaking out because they are savvy and have already cut a deal with comcast. this story is about the next netflix or the companies we have not explored yet that could

potentially change the tv and media viewing experience that could get started up in silicon valley, or maybe here in los angeles, and then cannot afford to be in this game because you've got to pay to play, to get access to the broadband. >> you say on per that if this say on paper- you that this deal passes. what happens in reality? >> other companies in silicon valley have made statements more recently about the fcc proposal for faster internet lanes where companies like comcast or at&t could charge more for. that is something regulators will want to take a look at this week, this month, as to whether they can approve this merger. if some startup out there could somehow persuade the fcc and look, ifulators, like, you allow this merger to go through, they will have more power and the fcc is proposing

this faster lane, and then the garage network will lose out. jon the next netflix, as pointed out, and that will be the key analysis -- pointed out, bel suffer, and that will the key analysis. >> thank you, everyone. we will continue our special content after this break. million, that is the size of the lobby effort trying to push this deal through. at his next. -- that is next. ♪

>> you are watching a special edition of "bloomberg west: comcast everywhere" covering the potential impact of a

comcast-time warner cable merger. i'm emily chang. comcast is no stranger to the pearly white halls of washington, but doesn't have enough influence there to push through -- does it have enough influence there to push through a merger deal? we look at a government connection -- the government connections, the extent to which are astounding. >> these guys have been at this for a long time. deal, theyrner cable have been working in the back halls of washington for quite a while, according to the center for responsive politics. comcast alone has spent over $79 million in lobbying in the last five years. and their connection to washington, well, look at the intrigue. the way comcast is legally working the system. take a look. >> in washington, there's lobbying, and then there is lobbying. the 40 ilion dollar proposed -- the $40 billion proposed deal between comcast and time warner

cable, it it's an exercise in lobbying. comcast has spent more than any other company, even defense companies, $18 million. $59,000 to john boehner. artie $7,000 to mitch mcconnell. 27,002 mark hugo. 25,002 harry reid. but the real power in washington -- take this guy, for instance. he is the chairman for the cable and television committee. he was given 19 million dollars in lobbying last year. before smith, chairman of was tom -- ncta

wheeler. where is he now? president obama appointed him to the fcc, the very committee that will -- the very organization oft will decide the fate this deal. and meredith baker, the fcc commissioner who helped to approve the deal, she left the fcc to go to comcast as their chief lobbyist. she is one of 107 lobbyist using power and money to urge washington to accept this deal. >> and that revolving door continues. meredith baker, we mentioned she left the fcc to go to comcast. she has now announced that she is leaving comcast to go lobby for the wireless industry. exit does sound a little "house of cards."

but they are all thinking about nextmoney -- thertheir employer. >> money is changing hands. >> it is worth it to understand how this is going to work. >> it is important to know that congress does not have any control over the merger's approval. the fcc and the justice department will be making a final decision. answering the big question -- does the merger violate any antitrust policy? with us now is the founder and cto of game changer, and innovation consulting firm. he supports the merger, saying it is good for consumers and competition. why? >> first of all, cable companies have in getting screwed by the content providers. if you look at time warner, one of the reasons they are having to merge is because cbs held them up last year. they wanted to raise the fees they were charging them from $.50 up to two dollars per for essentially

content that anybody could get for free over the airwaves. and the reason why the cable bills are going up is because the content providers have been sticking it to them. companies areable sticking it to the consumers. >> that is for the perception -- that is the perception that is why congress is holding these hearings. the reality is, if you look at the profit for cable companies, they are not in great shape and there are a lot better options out there. in fact, only about 40% of households subscribe to cable today. >> indeed, i think the decline in these description to cable and the increase in subscription to broadband might be the backdrop of this. has seen what2009 they charge for basic cable is up 60% from 2009. >> hundreds of channels i don't watch. >> right, but you are saying it is based on what the content providers are charging them. >> absolutely.

and on the broadband side, we've been talking about how they own the pipes. there are other options emerging. google announced recently 35 cities bringing a new type of broadband service that will be 100 times faster. >> they cannot possibly get to all of the places that comcast and time warner have. fundamentally in this country, one gets the high-speed. it is not the telecom companies or google. is inhey are proposing smaller cities. >> i would argue that there are many ways to get the internet today. the average consumer does not at mining fast speeds. you can watch movies today on your cell phone, on your ipad. there are many ways to do it through wi-fi. >> is not necessarily a pleasant experience. >> this is about fast internet. between cable tv and fast

internet, to be devil's advocate, i would say we have some of the slowest connection speeds over the internet in the world right now. maybe this merger should not be a selling point. is thatf the problems the cable companies have not been able to invest what they upgrade their, to services. a lot of companies that are fighting this merger are the smaller cable companies that will never invest in this. if you keep a business fragmented, it will be weaker. fundamentally, the people fighting this are the content providers. and it's a fight over money, basically, between companies. it's not about the consumer at the end of the day. >> you mention the falling profits of the companies. comcast made three -- $3.5 billion a few years ago to last billion. their profits are going up a lot.

>> but if you look at the content providers, i would argue it they are in worse shape than the content providers. you have been very successful and extracted a lot of money from companies like comcast. and if you keep the providers we, it will give them the opportunity to extract or money from them. >> what does this mean for apple tv, google, amazon fire tv? they may have to pay for money to comcast, but again, i don't know that it would impact the consumer at the end of the day. the consumer will pay a certain amount of money for content that they want to buy. some of that money will go to people like comcast and some of it will go to the content provider. today, the content providers are getting rich and the people i comcast, lesse so. this changes the balance of power a little bit. the way i would think about it, the give other industries. think about the retailing industry. people like walmart extract large fees from manufacturers to carry their product.

and the consumer doesn't see that. as industries become consolidated, the consumer has gotten lower prices. there is less competition. more money -- less money is going to the manufacturer. >> thank you for sharing your views with us here today on this special edition of "bloomberg west." should regulators allow the deal between time warner cable and comcast to go through? it would create a virtual monopoly. we will explore the antitrust issues surrounding this merger next on our special edition of "bloomberg west: comcast everywhere." ♪

>> welcome back to the special edition of "bloomberg west: comcast everywhere. if you've just joined us, we will be talking about the antitrust issues surrounding comcast's bid for time warner cable. cory johnson joins us.

also with us from capitol hill, columbia law professor scott castle, who just testified at today's hearing. that this merger doesn't violate any antitrust laws. why? >> to take a step back, the subject of the hearing was whether this transaction violates the clayton act. the clayton act requires you to evaluate whether a particular transaction will reduce competition. and there are two issues normally raised in antitrust when it comes to a merger. the main one is due to parties competing head to head, because there is a reduction in head to head competition, or a reduction in the number of competitors, which can have an anti-competition effect. the second issue directly raised by this transaction is whether the increased size of comcast might have the consequence of

foreclosing competition, particularly from online video. >> the executive vice president of comcast, david cohen, also testified today. i want to take a listen about what he said about consumer choice. >> it is the fact that every customer will have the same choices among broadband and video providers after this transaction as before. will comcast gain undue power over programmers. >> do you believe that, scott? .> i'm sorry could you say that again? that consumer choice will not change and that they will have the same number of choices? >> that is right. i think this transaction can be usefully contrasted between the sales merger between at&t and t-mobile. as a customer in new york city if i want cell phone service, i'm looking to at&t, t-mobile,

and others. the removal of one of those companies can result in for some prices consumers in the market. by contrast, as a time warner cable subscriber, i don't have the option of comcast as it is, nor after the transaction will lose any options currently in the marketplace. the usual concern of antitrust about reduction of competition and existing rivals simply is not present in this one. >> what about the geographic argument? there is an argument that says antitrust law, among other things, requires geographic overlap to be considered. and if there is none, it is because they are in so many separate places. in that be thrown out concern over this deal, or does it trumped it? bucket, the at&t-t-mobile bucket, is the loss of competition, which might happen in a geographical market. as you just noted, that is not true here, because there is no

geographic overlap between the companies. and in addition, there is no realistic prospect that they will start digging up streets and building new cable systems in each other's markets. but -- thate that bucket and put it aside, you still have to ask whether there might be for closure concerns, concerns about the exclusion -- eclosure concerns, concerns about the exclusion of others through this merger. >> thank you for joining us for this special edition of "bloomberg west." we will continue to follow the story on bloomberg television and streaming on your phone, tablet, and at bloomberg.com. we will see you tomorrow. ♪

>> from bloomberg world headquarters in new york, i'm mark hampton. this is "bottom line," the intersection of business and economics with a main street perspective. today, pro-russian separatists press ahead with autonomy in ukraine. and then fed chairman janet yellen's testimony before congress. an nfl draft 2014 kicks off tonight. ♪ to our viewers in the united states and those of you joining us around the world, welcome. we have full coverage of the stocks and stories making headlines today.