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Comcast, Time Warner deal in trouble

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More than a year after Comcast announced its plan to buy Time Warner, the result of the $42.5 billion deal remains uncertain as concerns grow. The deal is facing “intense scrutiny” at federal agencies, as the New York Timesnotes: the Justice Department “is reviewing whether the deal would harm competition.” And according to the Wall Street Journal, staff at the Federal Communications Commission are recommending that the agency issue a “hearing designation order,” effectively nixing the deal.

More than a year after Comcast announced its plan to buy Time Warner, the result of the $42.5 billion deal remains uncertain as concerns grow. The deal is facing “intense scrutiny” at federal agencies, as the New York Times notes: the Justice Department “is reviewing whether the deal would harm competition.” And according to the Wall Street Journal, staff at the Federal Communications Commission are recommending that the agency issue a “hearing designation order,” effectively nixing the deal. 
Industry experts say the hearing designation order doesn’t bode well for the merger. In 2011, AT&T and T-Mobile dropped their merger plans after the FCC put the transaction out for a hearing and the DOJ filed an antitrust suit. The L.A. Times reports that “it is unusual for the FCC to select the administrative hearing process, and the move comes nearly a full year after Comcast petitioned the government to approve the merger.” The same report quotes a blog post by Rich Greenfield, media analyst with BTIG Research: "This would appear to be a death sentence for the transaction.” 
Earlier reports from sources close to the deal hinted that it would be blocked, but remained cautiously vague. According to Bloomberg: “Staff attorneys at the U.S. Justice Department’s antitrust division are nearing a recommendation to block Comcast Corp.’s bid to buy Time Warner Cable Inc.” But the same report acknowledged that “the Justice Department antitrust lawyers’ recommendation isn’t yet complete and company officials remain confident,” underscoring how little definitive information from within the review process is available to the public.
 A Wall Street Journal article summarized the Federal Government’s general concerns:
 
Staffers at both the Justice Department and the Federal Communications Commission remain concerned the combined firm would wield too much power in the Internet broadband market and give it unfair competitive leverage against TV channel owners and new market entrants who offer video programming online, said people with knowledge of the review.
The Federal Government isn’t the only one with concerns. Media, consumer, and public interest groups have also focused on the proposed merger’s anti-competitive and public interest harms. The New York Times reported that
 
Media executives and public interest groups have raised concerns that an enlarged Comcast would have too much power over the future of the Internet and television. Among the fears are that Comcast would use its extra heft to force consumers to pay more for declining service and to push around Internet companies and TV networks, stifling innovation and diversity of programming.
 
These are legitimate concerns. Two years ago, Comcast reportedly influenced negotiations surrounding the potential sale of Hulu to Comcast’s competitors despite explicitly stating that it would not interfere. Now, as the New York Times reports, it seems Comcast’s history may be catching up to it: “Comcast’s record of compliance involving Hulu as well as several other conditions it agreed to in the NBCUniversal deal is now in the spotlight as regulators scrutinize Comcast’s proposed $45 billion takeover of Time Warner Cable.”More than a year after Comcast announced its plan to buy Time Warner, the result of the $42.5 billion deal remains uncertain as concerns grow. The deal is facing “intense scrutiny” at federal agencies, as the New York Timesnotes: the Justice Department “is reviewing whether the deal would harm competition.” And according to the Wall Street Journal, staff at the Federal Communications Commission are recommending that the agency issue a “hearing designation order,” effectively nixing the deal. More than a year after Comcast announced its plan to buy Time Warner, the result of the $42.5 billion deal remains uncertain as concerns grow. The deal is facing “intense scrutiny” at federal agencies, as the New York Timesnotes: the Justice Department “is reviewing whether the deal would harm competition.” And according to the Wall Street Journal, staff at the Federal Communications Commission are recommending that the agency issue a “hearing designation order,” effectively nixing the deal.

Industry experts say the hearing designation order doesn’t bode well for the merger. In 2011, AT&T and T-Mobile dropped their merger plans after the FCC put the transaction out for a hearing and the DOJ filed an antitrust suit. The L.A. Timesreports that “it is unusual for the FCC to select the administrative hearing process, and the move comes nearly a full year after Comcast petitioned the government to approve the merger.” The same report quotes a blog post by Rich Greenfield, media analyst with BTIG Research: "This would appear to be a death sentence for the transaction.”


Earlier reports from sources close to the deal hinted that it would be blocked, but remained cautiously vague.According to Bloomberg: “Staff attorneys at the U.S. Justice Department’s antitrust division are nearing a recommendation to block Comcast Corp.’s bid to buy Time Warner Cable Inc.” But the same report acknowledged that “the Justice Department antitrust lawyers’ recommendation isn’t yet complete and company officials remain confident,” underscoring how little definitive information from within the review process is available to the public.


A Wall Street Journal article summarized the Federal Government’s general concerns:

Staffers at both the Justice Department and the Federal Communications Commission remain concerned the combined firm would wield too much power in the Internet broadband market and give it unfair competitive leverage against TV channel owners and new market entrants who offer video programming online, said people with knowledge of the review.


The Federal Government isn’t the only one with concerns. Media, consumer, and public interest groups have also focused on the proposed merger’s anti-competitive and public interest harms. The New York Timesreported that

Media executives and public interest groups have raised concerns that an enlarged Comcast would have too much power over the future of the Internet and television. Among the fears are that Comcast would use its extra heft to force consumers to pay more for declining service and to push around Internet companies and TV networks, stifling innovation and diversity of programming.

These are legitimate concerns. Two years ago, Comcast reportedly influenced negotiations surrounding the potential sale of Hulu to Comcast’s competitors despite explicitly stating that it would not interfere. Now, as the New York Timesreports, it seems Comcast’s history may be catching up to it: “Comcast’s record of compliance involving Hulu as well as several other conditions it agreed to in the NBCUniversal deal is now in the spotlight as regulators scrutinize Comcast’s proposed $45 billion takeover of Time Warner Cable.”

 

 

“Review of Comcast Deal Is Said to Raise Concerns” (New York Times, April 17,2015)

“Comcast Strives to Save Merger With Time Warner Cable” (Wall Street Journal, April 19, 2015)

“U.S. Antitrust Lawyers Said Leaning Against Comcast Deal” (Bloomberg, April 17, 2015)

“Comcast’s Record in Past Deals May Be Hitch for Merger With Time Warner Cable” (New York Times, April 21, 2015)

“Comcast bid for Time Warner Cable faces regulatory resistance” (L.A. Times, April 22, 2015)