Re­ports say Com­cast to drop US$45 bil. Time Warner Ca­ble bid

The China Post - - WORLD BUSINESS - BY TALI AR­BEL

Com­cast is aban­don­ing its US$45.2 bil­lion pur­chase of Time Warner Ca­ble, ac­cord­ing to me­dia re­ports.

Bloomberg News and The New York Times both said Thurs­day that the ca­ble com­pany is plan­ning to drop the bid af­ter push­back from reg­u­la­tors. They both cited uniden­ti­fied peo­ple with knowl­edge of the mat­ter.

Com­cast and Time Warner Ca­ble de­clined to com­ment.

Com­bin­ing the No. 1 and No. 2 U.S. ca­ble com­pa­nies would put nearly 30 per­cent of TV and about 55 per­cent of broad­band sub­scribers un­der one roof. That would give the re­sult­ing be­he­moth un­prece­dented power over what Amer­i­cans watch and down­load.

That has had com­peti­tors, con­sumer groups, and Sen­a­tors lining up to op­pose the deal.

“This is one of those deals where the op­po­nents of the merger have been one of the most vo­cal I can re­mem­ber,” said S&P Cap­i­tal IQ Tuna Amobi.

One con­cern, for ex­am­ple, is that the com­pany could un­der­mine the stream­ing video in­dus­try by re­quir­ing oner­ous pay­ments from new on­line-only video providers for con­nect­ing to its net­work. Dish, the satel­lite TV com­pany be­hind the new Web video ser­vice Sling TV, and Netf- lix are op­posed to the deal.

An­other charge is that Com­cast hasn’t stuck to con­di­tions im­posed on it when it bought NBCUniver­sal. The com­pany says it has, ex­cept for one cir­cum­stance when the FCC found it wasn’t pro­mot­ing a stand-alone In­ter­net ser­vice. Com­cast says it fixed that.

Push­back against the merger has picked up in the last cou­ple weeks.

Al Franken, D- Minn., along with five other Demo­cratic sen­a­tors and Bernie San­ders, I-Ver­mont, this week urged the Fed­eral Com­mu­ni­ca­tions Com­mis­sion and the Depart­ment of Jus­tice to block the merger, say­ing it would lead to higher prices and fewer choices.

Re­cent me­dia re­ports sug­gested that reg­u­la­tors aren’t go­ing to ap­prove it. On Fri­day, Bloomberg, cit­ing uniden­ti­fied peo­ple, said Depart­ment of Jus­tice staff at­tor­neys were lean­ing against the deal. The Wall Street Jour­nal on Wed­nes­day said, also cit­ing uniden­ti­fied peo­ple, said that FCC staff rec­om­mended that the merger re­view go to a hear­ing un­der an ad­min­is­tra­tive law judge, although no fi­nal de­ci­sion had been made.

The FCC would send the deal to a judge if it didn’t be­lieve it serves the public in­ter­est. The com­pany has the right to present its case to the judge. But a trial could take months and even then a de­ci­sion could be ap­pealed to the FCC.

“It’s a dead end for Com­cast,” said Rob McDow­ell, a for­mer FCC com­mis­sioner.

The Jus­tice Depart­ment de­clined to com­ment. The FCC de­clined to com­ment and spokesman Neil Grace said the re­view is on­go­ing.

Com­cast spokes­woman Sena Fitz­mau­rice con­firmed that com­pany ex­ec­u­tives met Wed­nes­day with Jus­tice Depart­ment and FCC of­fi­cials. But she would not com­ment on what oc­curred dur­ing the meet­ings or what other con­ver­sa­tions the com­pany is hav­ing with reg­u­la­tors.

If the Com­cast-Time Warner Ca­ble deal falls through, a trans­ac­tion with Char­ter Com­mu­ni­ca­tions Inc. aimed to smooth­ing the way for reg­u­la­tory ap­proval also falls apart. Char­ter’s bid for Bright House Net­works, which it an­nounced in March, could also be killed.

Many an­a­lysts ex­pect that Char­ter, which lost out on its bid for Time Warner Ca­ble to Com­cast, to res­ur­rect its ef­fort if Com­cast is re­buffed.

“Other ca­ble deals that don’t in­volve Com­cast might be al­lowed to go through,” McDow­ell said. There “seems to be an an­tipa­thy to­wards Com­cast at the FCC” be­cause the agency thinks Com­cast didn’t stick to the con­di­tions of the NBCUniver­sal merger, he said.

A com­bined Char­ter and Time Warner Ca­ble would have 15 mil­lion video cus­tomers and 16.5 mil­lion In­ter­net cus­tomers. That’s still smaller than Com­cast alone, which has 22.4 mil­lion video sub­scribers and 22 mil­lion In­ter­net cus­tomers.

Com­cast wanted Time Warner Ca­ble to bulk up on sub­scribers as it deals with old ri­vals Dish, DirecTV and Ver­i­zon’s FiOS, as well as newer, cheaper on­line com­peti­tors like Net­flix. The com­pany had also said the deal would help it cut costs, in­clud­ing for pro­gram­ming — the shows and movies it pipes to sub­scribers.

But Com­cast may have to look over­seas for fu­ture ac­qui­si­tions.

“Wash­ing­ton’s con­cern here is ex­ces­sive con­trol of broad­band in the hands of a sin­gle com­pany,” wrote an­a­lyst Craig Mof­fett in a client email. “For all in­tents and pur­poses, their M&A am­bi­tions would be on ice in the U.S.”

AP

This Feb. 11, 2011 file photo shows the Com­cast logo on one of the com­pany’s ve­hi­cles in Pitts­burgh, Penn­syl­va­nia.

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