Netflix has come out against the $45 billion Comcast-Time Warner merger.
Reed Hastings, CEO of the streaming-video powerhouse, said in a letter to shareholders Monday that the proposed deal between the two companies would create a single company capable of wielding too much power over the broadband Internet market.
"Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services as Netflix," Hastings wrote, according to the Washington Post. "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.”
The letter was co-signed by Chief Financial Officer David Wells.
For Netflix, the merger raises concerns over net neutrality — the principle that Internet service providers must stream all content without bias or extra fees.
In February, Netflix reached an agreement with Comcast where Netflix agreed to pay “interconnection” fees to ensure faster streaming speeds for its content. The letter from Hastings on Monday indicates that he is fearful the merger could lead to similar, costly deals.
Comcast spokeswoman Jennifer Khoury disagreed with Hastings.
“Netflix’s opposition to our Time Warner Cable transaction is based on inaccurate claims and arguments,” she said in a statement. “There has been no company that has had a stronger commitment to openness of the Internet than Comcast.”
A company blog post from Comcast addressed the net neutrality issue directly and hinted at a possible ulterior motive for Netflix.
“Internet interconnection has nothing to do with net neutrality,” the blog read, according to Time magazine. “It’s all about Netflix wanting to unfairly shift its costs from its customers to all Internet customers, regardless of whether they subscribe to Netflix or not.”
Dan Rayburn, a technology analyst with Frost & Sullivan and vice president of StreamingMedia.com, agreed with Comcast.
“This is about Netflix protecting their business and wanting to keep their costs down,” he wrote on his blog. “This is simply about what’s best for Netflix’s business, nothing else.”