Comcast accuses Discovery of 'extortionate demands'

By Marina Lopes

WASHINGTON (Reuters) - Media company Discovery Communications Inc demanded business concessions as a condition for not opposing Comcast Corp's bid for Time Warner Cable Inc, Comcast told U.S. regulators in a filing on Tuesday.

"Such extortionate demands are patently improper," Comcast said in a summary of the filing. "As the self-proclaimed '#1 Pay-TV Programmer in the World,' Discovery does not need additional regulatory help to succeed in the marketplace."

Comcast Executive Vice President David Cohen said Discovery came to Comcast after the bid was announced and asked to negotiate a new distribution agreement. Discovery sought more carriage for its channels and higher fees, Cohen told reporters during a conference call.

A source close to Discovery said the company approached Comcast before the merger announcement and negotiations did not move forward. Discovery did not make any requests of Comcast that were tied to the Time Warner Cable bid, the source said.

In a statement, Discovery said it stands by concerns it expressed in a meeting with the Federal Communications Commission (FCC) this month that the merger could give Comcast more leverage to impose onerous terms on programmers. The company owns the Discovery Channel, Oprah Winfrey Network, TLC and Animal Planet cable channels.

"Comcast's silence on the details of key issues like program discounts, and instead, its continued strategy of intimidating voices that are not fully supportive of its position, is troubling," Discovery said.

Several weeks ago, Discovery told the FCC it was concerned the merger "could result in lower quality, less diverse programming and fewer independent voices among programmers."

The FCC is reviewing whether the proposed $45 billion merger between Comcast and Time Warner Cable, the two largest U.S. providers, is in the public interest.

Responding to objections to the transaction in a filing that was made public on Wednesday, Comcast said its bid for Time Warner Cable will not harm the public interest despite what it called "unfounded" and "self-interested" objections by content providers, Internet service providers and other groups.

Comcast also named Cogent Communications Group Inc and advertising group Viamedia as companies seeking business advantages by objecting to the merger.

Though analysts have predicted the FCC will ultimately approve the merger, regulators are expected to impose conditions. Particular attention is on Internet traffic issues as the FCC works on new "net neutrality" rules that guide how Internet providers route Web content. The agency could use merger conditions in lieu of rules that are facing a heated debate.

"This is not a transaction I think you are going to see accompanied by burdensome conditions," Comcast's Cohen said.

In August the FCC sought detailed tables on Comcast's interconnections with other services carrying Web traffic as well as information on network congestion.

(Additional reporting by Lisa Richwine in Los Angeles; editing by Jeffrey Benkoe and Matthew Lewis)