Comcast’s bid for Time Warner collapses
Its proposed takeover of Time Warner Cable has many opponents
Comcast is planning to drop a $45 billion takeover bid of Time Warner Cable after the deal encounters intense regulatory scrutiny over whether it is anti-competitive and in the public interest, reports say.
Comcast is planning to abandon its $45 billion takeover of Time Warner Cable after the deal encountered intense regulatory scrutiny over whether it was anti-competitive and in the public interest, people briefed on the matter said Thursday.
The merger would have united the country’s two largest cable operators and reshaped video and broadband markets.
Some lawmakers, public advocacy groups and media and technology companies had rallied against the merger, saying it would invest too much power and market share in one company. The combined company would have controlled just under 30 percent of the pay television subscribers and 35 to 50 percent of the nation’s broadband Internet service, depending on how regulators define the market.
A Comcast spokeswoman declined to comment, as did a spokesman for Time Warner Cable. An announcement is expected on Friday.
The collapse of the deal is a major
blow for Brian Roberts, the chief executive of Comcast who has steadily built his company into one of the country’s largest media conglomerates through a series of acquisitions in recent years. That includes the prominent 2011 acquisition of NBC-Universal, which also drew intense regulatory scrutiny but was ultimately approved.
Regulatory resistance
On Wednesday, Comcast officials met with the Justice Department and the Federal Communications Commission, facing signs of stiff resistance from the agencies. Justice officials were considering whether the deal would harm competition, while the FCC was evaluating whether the deal was in the public interest.
Last week, staff lawyers at the Justice Department raised concerns about the merger and were leaning toward recommending that it be blocked, sources said.
The death knell for the deal came on Wednesday when Jonathan Sallet, general counsel of the FCC, met with staff members. He told them that he was going to recommend that the transaction be referred to a hearing before an administrative law judge, one lawyer involved in the transaction said, an account confirmed by a former FCC commissioner.
That results in a drawnout process that essentially is a way of saying the deal would be blocked, said Robert McDowell, who until last year served on the commission. “That is a fatal bullet to the heart of the deal,” he said.
NBC agreement
The FCC staff had concluded that Comcast had failed to honor the conditions of the NBC merger, McDowell said, and it had little confidence that the company would comply with new agreements.
Another 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.
Comcast’s decision also effectively puts the brakes on several other multibillion-dollar transactions.
Charter Communications, the regional cable operator controlled by billionaire John Malone, will no longer acquire some of the Time Warner Cable markets that Comcast had expected to divest.
And Charter’s planned acquisition of Bright House Networks was also contingent on the completion of Comcast’s acquisition of Time Warner Cable.
While those blows represent a near-term setback for Charter, the company may soon resume its pursuit of Time Warner Cable.