April 23, 2015
Gene J. Puskar/for PhillyVoice
In this Feb. 15, 2011 file photo, a Comcast logo is displayed on an installation truck in Pittsburgh.
NEW YORK/WASHINGTON - 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.
A formal announcement is expected as early as Friday, the person added, asking not to be identified because the deliberations are confidential. 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, which is considering whether the deal would harm competition, and the Federal Communications Commission, which is considering whether the deal was in public interest.
Both agencies signaled reservations, though sources told Reuters it was the FCC's strong stance that particularly tipped the scales to drop the deal, which carries no break-up fee.
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.
That was the latest flex of muscle by the FCC 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.
Bloomberg first reported on Thursday that Comcast planned to drop its merger offer in the face of opposition from regulators. The Justice Department's antitrust attorneys were also nearing a recommendation to sue to block the merger, Bloomberg reported.
The Comcast-Time Warner Cable deal has faced vocal criticisms from some politicians, media company executives and diverse consumer and industry groups, who worried it would create a massive monolith with too much control over what Americans do online and watch on TV.
The merger would create a company controlling less than 30 percent of the U.S. pay-TV subscribers, following promised divestitures. It would provide high-speed Internet access to almost 40 percent of Americans, according to SNL Kagan data.
"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," said U.S. Senator Al Franken, a Minnesota Democrat and a vocal opponent, who called the news of potential collapse a victory for consumers.
Though the two companies largely do not compete against each other, opponents, including Dish Network Corp. and Netflix Inc., 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.
Comcast had argued the deal would bring faster service and better video services to more Americans, and it has sounded positive notes about the merger's fate until the last minute.
A heavyweight power broker in Washington, Comcast has spent $21.3 million to lobby on the merger and other matters since the first quarter of 2014, when the deal was announced, according to government disclosures. Comcast's chief executive, Brian Roberts, personally spoke with the FCC's Wheeler as recently as Monday, filings at the agency on Thursday showed.
"I thought (opposing the merger) was an uphill battle and a real long shot," said Gene Kimmelman, president of Public Knowledge, a public interest advocacy group that fought the deal. He said Wall Street would now reconsider some aggressive deals.
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.
Charter Communications Inc. had previously 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 might do next. But 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.
