Comcast/Time Warner Cable Merger in Doubt

By Ashley Jefferson,
Money and Investing Writer

Last Wednesday the Federal Communications Commission, better known as the FCC, recommended a hearing designation order.

This could not only stop the biggest merger in years, but the FCC stepping in could also signify that the deal is not in the best interest of the public.

No final decision has been made on this yet; Comcast (NASDAQ:  CMCSA) and Time Warner Cable (NYSE: TWC) still have the opportunity to weigh in on the matter.

A hearing has the possibility of being a drawn out process.

Many regulatory experts call this procedure a deal-killer.

Comcast has said before that the deal was in public interest because it will bring a “better video and broadband experience to Time Warner Cable customers and expand low income broadband options” accord to a Wall Street Journal article.

In a statement made last week, the company confirmed it met with the FCC and Department of Justice officials and said, “we do not believe it is appropriate to share the content of those meetings publicly.”

Why are regulators so concerned?

Well the government fears that the merger of these two companies would have too much power in the broadband and pay-television markets.

It is projected that the deal would create a company with control over about 30 percent of the Pay-TV market and 57 percent of the market for broadband Internet service.

The FCC defines this as speeds 25 megabits-per-second and higher.

“The fundamental problem with this transaction is there is no major constituency outside of Comcast and Time Warner Cable that want it to move forward,” said Rich Greenfield, analyst at BTIG Research, which has long took a stance that the deal would fall apart.

And he may be right. According to a New York Times article from Friday, it seems that Comcast is planning to abandon its $45 billion takeover of Time Warner Cable.

Comcast faced a lot of scrutiny over the potential merger.

Many opponents felt that the company would have too much power within the industry.

Over the last year, it has caused lawmakers, consumers, public advocacy groups, as well as media and technology companies to say no to the merger.

“My fear has been more and more concentration of power, and that is why I have been against this,” said Senator Al Franken, a Minnesota Democrat who has been a vocal opponent of the deal since February 2014, according to the New York Times. “We need more competition in this space, not less.”

Comcast’s Executive Vice President, David L. Cohen, is in charge of steering deals past regulators.

He is very well-connected and has lots of influence in Washington.

“This is not that complicated a deal from an antitrust or regulatory perspective,” Mr. Cohen said when the deal was announced. “It presents a lot fewer issues that the NBCUniversal transaction did.”

As of Thursday night, Comcast stock was up $0.47 while Time Warner Cable took a $0.88 hit.

Soon, we will see if Comcast and Time Warner Cable can come to a deal  that will satisfy the FCC and Department of Justice. However, consumers should see the intervention of these regulators as a good thing. This lets us know that the government is always looking out for the best interests of the consumer and in preventing monopolies.

A version of this article appeared in the Tuesday, April 28th print edition.

Contact Ashley at
ashley.jefferson@student.shu.edu

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s