NEW YORK (TheStreet) - A squabble between Netflix (NFLX - Get Report) and Comcast (CMCSA - Get Report) is heating up, as the cable giant quickly reacted to Netflix's very public opposition last night of its pending $45-billion takeover of Time Warner Cable (TWC - Get Report).
"Netflix is free to express its opinions. But they should be factually based. And Netflix should be transparent that its opinion is not about protecting the consumer or about Net Neutrality. Rather, it's about improving Netflix's business model by shifting costs that it has always borne to all users of the Internet and not just to Netflix customers," Jennifer Khoury, Comcast's senior vice president of corporate and digital communications, wrote in a blog post on Monday evening.
Included in the release of Netflix's first-quarter earnings last night, CEO Reed Hastings expressed his disapproval of the Comcast-Time Warner Cable pending merger in a quarterly letter to shareholders, saying that essentially that the combination is anti-competitive.
"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)," he writes in the letter. "As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes."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 anticompetitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger," Hastings wrote. Netflix is pointing its finger at Comcast even with an agreement the two companies made in February regarding interconnection. The agreement all but guarantees Comcast U.S. broadband customers with high-quality Netflix video for years. Comcast released first-quarter earnings on Tuesday morning. Comcast posted first-quarter adjusted earnings of 68 cents a share, ahead of forecasts of 64 cents. Revenue rose 14% to $17.41 billion. --Written by Laurie Kulikowski in New York. Follow @LKulikowski