Comcast, Time Warner Cable Deal Undone

A deal dreaded both by consumers and other businesses -- the Comcast TWC merger -- appears to be off. The merger at one time seemed inevitable, but the DoJ and FCC apparently threw up so many roadblocks that Comcast buckled. "It's not good enough just to show that you won't lessen competition," said attorney Mark Ostrau. "You actually have to show that there are some public interest benefits."

Comcast has decided to abandon its plan to merge with Time Warner Cable, according to multiple press reports based on briefings with people familiar with the matter. The company is expected to make a formal announcement on Friday.

About a week after reports emerged indicating the U.S. Department of Justice was leaning against Comcast’s US$45.2 billion dollar bid to absorb TWC, unnamed sources told several news outlets that the Federal Communications Commission was leaning in the same direction and could starve the deal with years of appeals.

Bad Day for a Deal

Comcast and Time Warner met with the FCC on Wednesday, and the two companies left the meeting feeling that the proposed merger was in serious trouble, according to a Bloomberg report.

The FCC has yet to vote on whether the merger should move forward. In the meantime, the Justice Department has been preparing for a lawsuit that it could use to block the deal. It appears neither action will be necessary, however.

Comcast acknowledged both meeting with the FCC and the Department of Justice, but declined to provide the E-Commerce Times with any information about what took place.

The company issued a prepared statement on the matter: “We had one in a series of meetings with the Department of Justice yesterday, as well as another meeting with the FCC. As with all of our DoJ discussions in the past and going forward, we do not believe it is appropriate to share the content of those meetings publicly, and we, therefore, have no comment. Similarly, our only comment on FCC meetings will be our filed ex parte communication.”

Who Would Have Benefited?

The Comcast-Time Warner Cable merger was proposed officially a little more than a year ago, and almost immediately, it was met with skepticism. Consumer groups and regulators alike expressed fear about what could happen if Comcast, already the largest broadcast and cable company in the world, acquired second-place TWC.

The merger plan would have been good for consumers and the mass media industry, according to Comcast spokesperson Sena Fitzmaurice.

“The deal would benefit consumers with faster broadband speeds, better video products — we have twice as much video on demand as TWC — more competition for businesses, and a low-income adoption program in new cities,” Fitzmaurice told the E-Commerce Times.

Deal or No Deal?

On the other hand, a proposal to merge Comcast and Time Warner Cable is exactly the sort of deal that should not be approved, said Mark Ostrau, chair of Fenwick & West’s antitrust and unfair competition group. Ostrau noted that he was not representing anyone directly involved or affected by the plan.

At some point, that level of concentration in key delivery and content areas can’t be good for consumers, he said, adding that to date, there has been no credible argument for how the merger would increase competition, improve delivery or lower prices for consumers.

“It’s hard to fathom why, from the FCC’s perspective, this is in the public’s best interest,” Ostrau told the E-Commerce Times. “From the Justice Department’s perspective, there is significant concern that this may substantially lessen competition in one or more markets.”

The Justice Department wanted to see significant divestitures, and it appears Comcast’s initial proposals were insufficient, as far as reducing the company’s total number of subscribers in a sufficient amount of major markets, Ostrau noted.

Meanwhile, Comcast and TWC’s commitment to adhering to the FCC’s rules on Net neutrality seemed to help the companies gain ground, but that wouldn’t take them far enough — especially if the commission’s new rules were upheld. The new rules would give the FCC the power to enforce Net neutrality across the board, but they still would allow a fair amount of room in which anticompetitive behavior could take place, according to Ostrau.

Square One

Despite Comcast’s efforts to prove that it was willing to do whatever it might take to pull of the merger, regulators and consumers were left without answers to many of the questions that arose in February 2014, when the proposal was formally announced.

“It’s not good enough just to show that you won’t lessen competition,” said Ostrau. “You actually have to show that there are some public interest benefits. Even with the divestitures, it’s still hard to say that there are some investments that will only occur as a result of the deal and wouldn’t appear absent that.”

Quinten Plummer is a longtime technology reporter and an avid PC gamer who explored local news for a few years, covering law enforcement and government beats, before returning to writing about things run by ones and zeros and the people who make them. If it pushes pixels or improves lives, he wants to learn all he can about it.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

E-Commerce Times Channels