Comcast confirms merger with Time Warner Cable is off

http://www.theguardian.com/media/2015/apr/24/comcast-confirms-time-warner-cable-merger-off

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The proposed merger between cable giants Comcast and Time Warner is off, Comcast’s chairman and chief executive said on Friday.

The deal would have brought together the US’s two largest cable companies and given one company control of as much as 57% of the broadband internet market. Internet activists and companies including Netflix had attacked the merger claiming Comcast would have effectively become a monopoly in control of the internet.

In a statement, Brian Roberts said: “Today, we move on. 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.”

The deal had been reported to be doomed on Thursday, given opposition from the Federal Communications Commission (FCC). But the $45bn merger appears to have foundered far earlier.

In February the FCC signed off on tough new rules to protect an open internet. Backed by Barack Obama, the rules aim to enshrine the principle of net neutrality – the idea that all information is treated equally online and internet service providers, like Comcast, cannot discriminate against or prioritise services or sites.

The US authorities cited concerns that the merger would have given Comcast too great a role as a “gatekeeper” even with the net neutrality rules. The FCC chairman, Tom Wheeler, said in a statement: “The proposed merger would have posed an unacceptable risk to competition and innovation, including to the ability of online video providers to reach and serve consumers.”

Lobby groups supported by Comcast and Time Warner have begun legal proceedings to have the rules thrown out arguing the FCC had overreached its authority and consumers would ultimately “bear the burden of new taxes and increased costs”.

A Department of Justice statement said: “Comcast abandoned its plans to acquire Time Warner Cable for approximately $45.2bn after the Department of Justice informed the companies that it had significant concerns that the merger would make Comcast an unavoidable gatekeeper for internet-based services that relay on broadband connection to reach consumers.”

The attorney general, Eric Holder, said: “The companies’ decision to abandon the deal is the best outcome for American consumers.

“This is a victory not only for the Department of Justice but also for providers of content and streaming services who work to bring innovative products to consumers across America and around the world.”

After announcing the collapse of the deal, Roberts appeared on one of his company’s own TV channels, CNBC, to discuss the situation. Asked about Holder’s statement, he said: “We respect their judgment, even if we didn’t get our case made the way we saw it. And I think it’s best for us to move on.”

The collapse of the deal comes as a bitter blow for Comcast, one of the US’s most politically connected companies. Roberts and Obama have been regular golf partners and David Cohen, executive vice-president, is a major fundraiser for the Democratic party.

The deal, announced in February 2014, would have reshaped the media landscape in the US. Together the companies would have controlled 30% of the pay-TV market as well as the majority of broadband internet access.

Comcast had argued that the merger would not erode competition because the two companies do not compete in most geographical areas. Content companies and activists however were concerned that the mega merger would give one company too much power as TV shift online.

Craig Aaron, president of pressure group Free Press, which campaigned against the merger, said: “This proposed merger was bad news from the beginning. Giving one company control over so much of America’s communications is neither pro-consumer nor pro-competition. Everybody knows that. Comcast finally got the message that people can’t be fooled into thinking that this merger would benefit cable customers and internet users in any way.“Comcast’s failed bid to control Time Warner Cable should be a lesson for the industry. Communications giants should stop trying to create local monopolies and instead focus on competing to provide the fast, affordable and neutral internet services that so many Americans demand.”