Comcast Corp. on Friday ended its plans to acquire Time
Warner Cable Inc., as increasing pressure from regulators prompted
the end of the $45.2 billion deal. In a separate release, Time Warner Cable
Chief Executive Robert D. Marcus said his company remains strong. Regulators
applauded the deal’s demise. Attorney General Eric Holder said the decision was
“the best outcome for American consumers,” and Federal Communications
Commission Chairman Tom Wheeler called it “in the best interests of
consumers.”
The Comcast-Time Warner Cable deal had promised to reshape
the media landscape—forcing TV channel-owners and other pay-TV operators to
contemplate their own mergers. As a result of the deal falling apart, companies
across the industry will have to reassess their calculations. The deal’s end
will raise the prospect of another suitor going after Time Warner Cable. Charter
Communications Inc., which had pursued Time Warner Cable before
it was snapped up by Comcast, remains interested in the company, people
familiar with the situation said. Charter has been in contact with banks about
a debt package in recent weeks.
Comcast this week sought to make last ditch efforts to save
the deal. On Monday, Comcast CEO Brian Roberts spoke to Mr. Wheeler to try to
persuade him of the benefits for consumers. On Wednesday and Thursday, Comcast
officials met with FCC staff and were told in no uncertain terms that no
matter what the company offered in terms of concessions, the deal was headed
for trouble, one person close to the companies said. “They wanted to kill it.”
Though Comcast could have fought to preserve the deal, the
drawn-out process may not have been worth it, which is why such a hearing is
known by regulatory experts as a deal killer. Agency staffers said a hearing
could take up to two years. Regulators worried about the power Comcast would
amass through the deal, with roughly 30% of the U.S. pay-TV market and 57% of
the broadband market, which the FCC now defines as speeds of 25 megabits per
second and higher. The agencies’ biggest concerns came down to how they could
protect the nascent streaming TV industry against the broadband colossus the
deal would create, people familiar with the meetings between Comcast and the
regulators said.
The Justice Department stepped up its own review in recent
weeks, asking media companies that opposed the deal for examples of how Comcast
may have abused its market power. The government also was skeptical of whether
some of the restrictions it put on Comcast while approving its acquisition of
NBCUniversal had worked as intended, people familiar with the matter have
said.
A breakup scrambles two deals Charter had in the works.
Comcast had a deal with Charter to sell or spin off about 4 million subscribers
that Comcast and Time Warner Cable planned to divest in their combination.
Plus, Charter had agreed just last month to buy cable operator Bright
House Networks LLC for $10 billion. That transaction was contingent on the
Comcast-Time Warner Cable deal closing.
With the bid for Time Warner Cable over, Comcast could be in
a position to do another major deal to seek out further growth. It could go
hunting overseas for cable operators or TV channel-owners, as some of its peers
in the media industry have done, or make a push into the wireless business.
Comcast has in the past several years looked at various international assets
but hasn’t been convinced to pursue any target, a person familiar with the
matter said.
Time Warner Cable believes its assets are more valuable
today than they were a year ago thanks to better operating by management, a
person familiar with the company’s thinking said. With its strong balance
sheet, TWC could be an acquirer in its own right should the deal fall apart,
one person said. Time Warner Cable has a roughly $42 billion market capitalization
While Comcast’s bid for Time Warner Cable was one rationale
for media companies to consider getting bigger through mergers, it wasn’t the
only one. Media executives say there are still reasons for TV-channel owners to
combine. As distributors look to cut costs amid cord-cutting, smaller and
midtier channels face the prospects of lower carriage fees—or even being
dropped altogether.
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