Comcast, Time Warner Cable drop $45bn mega-merger plan

Comcast and Time Warner Cable announced Friday they had scrapped their mega-merger plans, amid opposition from US antitrust regulators to the tie-up of the cable and broadband Internet giants.

"Today, we move on," Comcast chairman Brian Roberts said in announcing the end of a $45 billion deal.

"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."

TWC said in a separate statement that the two firms had "mutually agreed to terminate their merger agreement," which had drawn criticism from consumer activists and some lawmakers for giving too much market power to a single firm.

The US Justice Department said separately it had told the firms they "would make Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers."

"The companies' decision to abandon this deal is the best outcome for American consumers," Attorney General Eric Holder said in a statement.

Comcast and TWC -- spun off in 2009 from media giant Time Warner -- had argued the deal would not hamper competition because their territories have little overlap.

They also said cable was getting increasing competition from video streaming services Netflix and Amazon,
among others.
If allowed to proceed, the deal would have given the combined firm more than 30 million customers over much of the United States.

- Dominating Internet connections -

The deal would have concentrated market power not only in cable television, but in high-speed Internet service via cable -- where most American households connect.

John Bergmayer at the consumer activist group Public Knowledge, welcomed the news, saying a merger would "be bad for consumers and bad for competition."

"Had this deal gone through, Comcast would have become an industry giant with more than 50 percent of the nation's broadband connections," he said in a statement.

Marta Tellado, president and chief executive of Consumer Reports, said, "Comcast never was able to make a convincing case for why the merger would benefit anyone other than Comcast."

A number of lawmakers also opposed the plan.

Senator Richard Blumenthal said the merger "would have led to higher prices, fewer choices, and poorer quality services for Americans."

Senator Ed Markey said that "the only competition consumers would have had in their living room if this mega-merger had gone forward would be who handles the remote control."

Some analysts argued, however, that blocking the merger will do little to improve choices for consumers.

"Blocking the Comcast-TWC merger won't actually do anything to increase competition, encourage deployment or promote adoption among the underserved," said Berin Szoka at the lobby group TechFreedom.

- Looking ahead -

The end of this deal raises questions about how the industry will restructure moving forward.

Charter Communications announced last month it would pay $10.4 billion for Bright House Networks, to create the second-largest US cable operator. But some analysts say TWC could be part of a different deal.

"As Charter's proposed acquisition of Bright House was contingent on the completion of the Comcast/TWC merger, we believe Charter could make a second attempt to acquire TWC," said RBC Capital Markets in a research note.

AT&T's blockbuster deal for satellite broadcaster DirecTV -- worth a whopping $48.5 billion -- is also under regulatory review.

Many of those opposing the Comcast deal also want to stop this merger, which could allow AT&T to step up its pay TV offering to go along with wireless and other telecom services.

New wireless technologies, say some analysts, could deliver high-speed access to consumers to allow them to bypass the cable giants.

"Perhaps as wireless moves to 5G and 6G, the speeds will provide the ability to have television and high speed Internet providers wirelessly," said industry analyst Jeff Kagan.