Comcast looking to drop Time Warner Cable merger: source

Reuters News
Posted: Apr 23, 2015 3:25 PM

By Liana B. Baker, Alina Selyukh and Diane Bartz

NEW YORK/WASHINGTON (Reuters) - Comcast Corp's board was meeting late on Thursday to finalize plans to abandon its proposed $45 billion merger with Time Warner Cable Inc, according to a person directly familiar with the matter.

An announcement is expected as early as Friday, the person added, asking not to be identified because the deliberations are confidential.

Representatives of Comcast and Time Warner Cable declined to comment.

The news came a day after officials of Comcast and Time Warner Cable, the two largest U.S. cable companies, met with reviewers at the Justice Department and the Federal Communications Commission.

Bloomberg reported on Thursday that Comcast planned to drop its offer in the face of opposition from U.S. regulators.

The Justice Department is weighing whether the deal hurts competition while the FCC is weighing whether it is in the public interest.

Both agencies expressed concerns, though sources told Reuters it was the FCC's strong stance that particularly tipped the scales to kill the deal.

FCC reviewers told the agency staff at a Wednesday briefing that they planned to recommend taking the merger issue to an administrative law judge for a hearing, which would amount to the FCC blocking the deal.

The FCC's move is its latest flex of muscle under Chairman Tom Wheeler, who recently imposed the strictest-ever regulations on Internet providers and in 2014 helped scuttle a potential merger between wireless carriers Sprint Corp and T-Mobile US.


Gene Kimmelman, president of Public Knowledge, a public interest advocacy group, and an opponent of the deal, said Wall Street would now reconsider some aggressive deals. "I thought this was an uphill battle and a real long shot," he said of opposition to the Comcast-TWC deal, indicating how the opposition's apparent success would influence other deals.

The Comcast-Time Warner Cable deal faced vocal criticisms from some politicians, media company executives and diverse public and industry groups, who worried it would create a massive monolith with too much control over what Americans do online and watch on TV.

Though the two companies largely do not compete against each other, opponents have been drilling into the combined company's broadband reach and raising concerns about its potential gate-keeping power over the online video market, among others.

"If reports of the collapse of the deal are true, it would be a huge victory for American consumers.” said U.S. Senator Al Franken, a Democrat of Minnesota and a vocal opponent of the merger.

"This transaction would create a telecom behemoth that would lead to higher prices, fewer choices and even worse service. We need more competition in this space, not less," Franken said in a statement.

Earlier this week, six senators sent a letter to the FCC urging that they reject the merger.

If the deal falls through, investment bankers also look to suffer as they are worried about whether they will get paid, with smaller advisory firms particularly on edge.

Last week, Bloomberg reported that attorneys at the Justice Department's antitrust division were nearing a recommendation to sue to block the merger, citing concerns for consumers.

Earlier, Charter Communications Inc had lost out to Comcast in a bid to acquire Time Warner Cable.

A Charter spokesman had no comment on the Comcast-Time Warner Cable deal or what Charter plans to do next. However, Charter's controlling shareholder, Liberty Media Corp, has indicated continuing interest.

At an investor day last November, when asked if he would pursue Time Warner Cable if the Comcast bid fell through, Liberty Media Chairman John Malone said, "Hell yes."

Greg Maffei, chief executive of Liberty Media, had no comment on Thursday.

Shares of Comcast closed up 0.8 percent at $59.23 and Time Warner Cable closed down 0.6 percent at $148.76. Charter shares closed down 0.7 percent at $183.58.