Comcast is planning to drop its proposed buyout of Time Warner Cable. According to multiple news outlets citing a variety of unnamed sources, Comcast is backing the deal in the wake of intense scrutiny from antitrust regulators in the Federal Communications Commission (FCC) and in the U.S. Department of Justice (DOJ).
The deal would have given Comcast more than 30 percent of the cable-TV business in the U.S., and some 57 percent of the broadband market. By most measures, that is an awful lot of power to accumulate in the hands of one corporate entity, especially when that corporate entity also owns NBC Universal, putting it in both content delivery and content supply.
When it first announced in early 2014, most observers felt it would sail through regulatory hurdles, as the Obama administration had largely taken a hands-off approach to big business. It was that same administration that allowed the NBC Universal deal to go through in 2011 (it began in 2009).
However, regulators began to amp up pressure against the deal behind the scenes earlier this year. For instance, the DOJ started asking for examples of Comcast abusing the power it had already accumulated. The death knell may have been sounded on Wednesday when FCC staff recommended a hearing over the merger.
According to The Wall Street Journal, the hearing process could have added years to the approval process. More importantly, FCC staff said the merger wasn't in the public interest, a strong signal that FCC Chairman Tom Wheeler didn't care for the deal.
That was apparently the straw that broke the corporate camel's back, because the deal is now off.
Senator Al Franken (D-MN) has been critical of the deal from the get-go. In a statement, he said:
I've been opposed to this deal since it was first announced, and I'm glad that over the last 15 months, more and more people have come to see it the way I do. This transaction would create a telecom behemoth that would lead to higher prices, fewer choices, and even worse service. We need more competition in this space, not less. If reports of the collapse of the deal are true, it would be a huge victory for American consumers.
In a word, yep.