By James DeRuvo (doddleNEWS)
Like a tumbling house of cards, there’s breaking news that Comcast has decided to abandon its $45 billion acquisition of Time Warner Cable, sparking what could be considered by some a victory for consumers of both cable and internet content. The decision came quickly after news leaked that both the FCC and the U.S. Justice Department were getting ready to recommend the deal be quashed, and Congress was about to call hearings regarding the potential monopolistic impact such a deal may have.
The deal to merge the two mega media companies was announced last fall, and many feared that with such an acquisition, that Comcast could control nearly have the US cable and internet households. Such power could impact not only prices, but also the delicate situation regarding net neutrality rules that, depending on who you talk to, could allow Comcast and other ISPs to force content providers like Netflix to pay for a so-called “fast lane” to their customers.
This caused Comcast to engage in a campaign to defend the deal with arguments that the Justice Department and the FCC ultimately found non-persuasive. And since public opinion on the deal has never been positive on the deal, the Feds may have seen this as a compelling reason to say no to the deal.
An FCC hearing can take months to complete and effectively kill a deal by dragging out the approval process beyond the companies’ time frame for completion. Justice Department staff is also leaning against the deal, Bloomberg reported last week. – Alex Sherman, Bloomberg Business
The handwriting seemed to be on the wall this week, as a report was leaked that lawyers from both departments contacted both Time Warner and Comcast to advise them that they were planning to officially come out against the deal because it doesn’t help consumers, and could, in fact, raise prices dramatically. Additionally, the FCC was looking to perhaps even drag out the process with hearings that could take months to complete, and then there was Congress who would sure want to get just as much camera time with hearings of their own.
The same tactic happened back in 2012, when a proposed merger of AT&T and T-Mobile was ultimately dropped as the FCC came out against it, with a recommendation of similar hearings, and the Justice Department had filed a lawsuit to block the merger.
Comcast seems to have seen a similar path before them, and with nearly $50 billion on the line, decided it simply wasn’t worth the risk to both their bottom line and a potential hit on their stock price. Ironically, when news came out that the feds were going to come out against the merger, shares of both Comcast and Time Warner actually rose between .5 and 2.2%, indicating that Wall Street really wasn’t onboard with the merger either.
The official Comcast announcement of the deal being abandoned could come as early as tomorrow.
Hat Tip – The Verge