Bell Atlantic Chief Defends TCI Merger : Communications: He says deal would generate $15 billion in capital spending. But Viacom’s Redstone accuses TCI of “extraordinary and abusive monopoly power.’

The chairman of Bell Atlantic Corp., campaigning here for his proposed merger with cable giant Tele-Communications Inc., told lawmakers Wednesday that the two companies would spend $15 billion over the next five years to modernize the way video, voice and other information is delivered to U.S. homes.

Bell Atlantic Chairman Raymond W. Smith dangled the prospect of a greater than 15% boost in capital spending plans of the two companies during a Capitol Hill showdown with rival media chiefs who were being grilled about a recent wave of media mega-mergers.

The occasion was a special hearing of the Senate subcommittee on antitrust, monopolies and business rights, headed by Sen. Howard M. Metzenbaum (D-Ohio), with the ostensible aim of investigating whether the current merger mania among media and telecommunications concerns is getting out of hand.

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Giving testimony was a trio of the top executives most eager to merge: Smith, Viacom International Inc. Chairman Sumner Redstone and Martin Davis, chairman of Paramount Communications Inc. Most notably absent was John Malone, chief executive of TCI, who was said to be abroad.

“Will this unprecedented convergence of telecommunications giants create a swarm of cost-cutting entrepreneurs or a handful of price-gouging monopolists?” asked Metzenbaum, a longtime opponent of big mergers.

Redstone, whose company is trying to buy Paramount, quickly offered the panel a critical assessment in blustery testimony during which he blasted the proposed Bell Atlantic/TCI merger.

Characterizing Viacom’s proposal to acquire Paramount as benign, Redstone accused TCI of “extraordinary and abusive monopoly power.” He later submitted written testimony that said TCI’s merger with Bell Atlantic “would only aggravate the serious structural problems that are the source of the anti-competitive power that TCI so brazenly abuses.”

Smith defended his proposal as “pro-competitive” and said $15 billion would be spent to enhance TCI’s coast-to-coast network of cable systems so that they would be able to provide telephone and interactive video services.

“By creating a company that will be one of the world’s premier providers of communications services, we will help secure America’s preeminence in the global information marketplace,” Smith said.

The prospects of the $30-billion merger of Bell Atlantic and TCI has alarmed several lawmakers and a number of consumer activists, including Ralph Nader, who last week joined former Federal Communications Commissioner Nicholas Johnson in asking the Justice Department to block the deal.

Officials of the Bell Atlantic phone company and TCI, the nation’s largest cable company, acknowledge that their merger would create the sixth-largest U.S. corporation. The merged company, whose combined value would be $60 billion, would own phone and cable lines entering about 20% of U.S. homes and a significant share of entertainment programming.

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While antitrust regulators have promised to closely examine the transaction, Metzenbaum is considering legislation that would block the deal, saying such mergers “can create a mega-monster. . . . Such a concentration of power cannot be dismissed lightly by the Congress, the antitrust authorities or the Federal Communications Commission.”

Metzenbaum has not detailed what legislation he has in mind, but a staff aide said any bill would be aimed at telecommunications combinations rather than being a broad new antitrust measure or a bill targeted only at the proposed merger of Bell Atlantic and TCI.

At Wednesday’s hearing, Sen. Arlen Specter (R-Pa.) and Sen. Orrin G. Hatch (R-Utah) also expressed concern.

But Sen. Strom Thurmond (R-S.C.) cautioned subcommittee members about trying to block the deal with new legislation, saying, “It’s not necessary for Congress to micro-manage this transaction.”