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Netflix Attacks Comcast, Time Warner Cable Merger

Tickers in this article: CMCSA NFLX VZ

NEW YORK (TheStreet) - Netflix continued to criticize Comcast's proposed $45 billion takeover of Time Warner Cable , calling the merger anti-competitive in a letter appended to the company's better-than-expected first quarter earnings .

In a manner characteristic of Netflix's iconic character, Frank Underwood of House of Cards fame, CEO Reed Hastings may smell an opportunity in the merger to solve a long-running risk for the steaming video service. Netflix has successfully used Comcast's merger with Time Warner Cable to strike fear in Washington that broadband providers will soon set up a prohibitively expensive toll road between shows such as House of Cards and TV sets across the U.S.

Undue power through mergers and acquisitions or cartel pricing could force Netflix and its streaming video competitors to pay up for their broadband usage, Hastings & Co. have argued. Those costs, of course, would be borne by consumers.

It doesn't appear Netflix is going to back down anytime soon. Ultimately, however, Netflix may see that it currently wields the leverage to solve a standoff between streaming video firms and broadband providers.

After all, Netflix already solved its issues with Comcast through an interconnection agreement. Other than a rejection of the Comcast and Time Warner Cable merger, similar deals may prove its desired outcome.

What Netflix Said

Netflix didn't mince words when addressing the Comcast and Time Warner Cable merger on Monday.

"Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger," Netflix said.

The company's comments are unsurprising. In March, Netflix criticized what it perceived to be an assault on so-called net neutrality, which could allow broadband providers to charge a toll for interconnection to services like Netflix, YouTube, Skype or intermediaries like Cogent, Akamai and Level 3 Communications.

Those comments were aimed at Internet service providers (ISPs) such as AT&T, Comcast and Verizon. However, Netflix has also been willing to point its finger directly at Comcast, which is lobbying for the merger of the two biggest cable and internet providers in the United States.

"If the Comcast and Time Warner Cable merger is approved, the combined company's footprint will pass over 60 percent of U.S. broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband (>10Mbps)," Netflix said on Monday.

"As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes," the company added.

Netflix's lashing criticisms of the Comcast and Time Warner Cable merger came as somewhat of a surprise in March.