Comcast-Time Warner Merger Is Dead
The merger of Time Warner Cable and Comcast, which had been expected to create the largest Internet provider and the largest cable operator in America, was effectively annulled recently by the F.C.C.
The F.C.C. had recommended the deal be examined by a judge in a court hearing, a step that proved too much for Comcast to bear. Comcast released a statement on April 24th by its C.E.O., Brian L. Roberts:
“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 move ended weeks of speculation about how the F.C.C. and Justice Department would respond to the companies’ plans. Comcast had repeatedly floated the notion that the deal would be good for consumers, releasing statements that it was “pro-consumer, pro-competitive, and strongly in the public interest.”
But Comcast was not hiding the fact that they were already the biggest player in the U.S. market, with $64 billion in revenue for 2013 and $7.1 billion in profits. Time Warner Cable, for its part, reported losses of nearly $2 billion on $22 billion in revenue.
After months of being asked by shareholders to do a deal, Comcast C.E.O. Roberts reached out to Time Warner Cable to restart negotiations that had begun and then faltered in 2014. An all-stock deal was ultimately struck that had Comcast buying Time Warner for $159 per share, or $45 billion. Time Warner agreed to no breakup fees on the deal, while Comcast agreed to extend net neutrality—an important Internet caveat for consumers—and to drop 3 million subscribers, as conditions that would hopefully placate FCC regulators.
The deal was better for Time Warner than a competing deal that smaller player Charter Communications was at the time offering, both in terms of price and the particulars of the deal. As soon as Charter heard the news about the Comcast deal, it canceled its bid, even though it had been pursuing Time Warner for nearly a year. But announcements that the Comcast merger wouldn’t go through is likely sweet news to Charter, whose chief backer, billionaire John D. Malone, now does not have to contend with a mega-monopoly that would dwarf his interest.
Consumers, for their part, will now have smaller and less dominant players to contend with, in an age when high cable and Internet fees in the United States are often multiples of their corresponding costs in other countries.