It does sound a bit like Kroger charging Kraft to carry their cheese in the stores.. although there have been arrangements like that to improve product placemen

It does sound a bit like Kroger charging Kraft to carry their cheese in the stores.. although there have been arrangements like that to improve product placement on shelves (I think). These companies are swapping services. They both benefit from that. If one company thinks they have the power to do so, they can also extract additional payment. It's just a matter of the details on who has that power. Level3 can choose to pay transit providers (which Comcast can underbid), or they can cut off the Netflix streams (which likely pisses off Netflix quite a bit, and certainly cuts their own revenue). I suspect Comcast wins here unless the PR kerfuffle gambit works.