What doomed Comcast's $45 billion bid for Time Warner Cable?
Comcast announced Friday that it has canceled its deal to buy Time Warner Cable. Government regulators, who would have had to approve the merger, said it would have been harmful to consumers and competition.
The proposed merger of Comcast and Time Warner Cable, the two largest cable companies in the United States, was canceled this week in the face of opposition from the Federal Communications Commission and the US Department of Justice. The deal, which would have allowed Comcast to buy Time Warner Cable for $45.2 billion, was criticized by regulators for its potential to harm consumers and competition in the cable market.
“Today, we move on,” Comcast chief executive officer Brian Roberts said in a statement. “Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away.”
Comcast had argued that the merger would not reduce competition since Comcast and Time Warner Cable do not compete directly with one another in many parts of the US, but the FCC and DOJ said the deal would give the combined company an unfair competitive advantage.
“The proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services,” FCC Chairman Tom Wheeler said in a statement. He added that the merger would have allowed Comcast to own a massive amount of programming as well as the largest customer base of any telecom company -- about 30 percent of TV and 55 percent of broadband subscribers.
The harshest criticism of the deal came from consumer advocacy groups that worried Comcast would be able to achieve a monopoly over both programming and distribution. Comcast already owns NBCUniversal, several regional sports networks, and even part of the Hulu over-the-top streaming service, and merger opponents said it would be able to charge unaffiliated providers such as Netflix higher rates to deliver its content to Comcast subscribers.
Comcast lobbied for more than a year on behalf of the merger, saying that it wouldn’t hurt competition since Comcast and Time Warner Cable do not compete for subscribers. (Both companies serve cable and broadband customers across the country, but not in the same cities.) Comcast argued that the merger would create efficiencies that would allow it to offer better Internet, cable, and phone service.
Comcast’s canceled bid also affects Charter Communications, which had planned to swap systems in order to gain customers if the Comcast-Time Warner merger were approved. Charter would also have purchased Bright House Networks for $10.4 billion, which would have made it the country’s second largest cable company behind the newly enlarged Comcast. Charter had been trying to buy Time Warner Cable for months before the Comcast agreement was announced in February 2014, and now that the deal has been canceled, Charter may try again to acquire the company.