Comcast Throws in the Towel on Time Warner Cable Acquisition Bid24 Apr, 2015 By: Erik Gruenwedel
Comcast April 24 officially ended its 14-month attempt to acquire Time Warner Cable for $45.2 billion.
The deal, which would have combined the No. 1 and No. 2 cable operators, would have also consolidated much of the nation’s Internet distribution in the hands of one company, according to critics of the transaction.
In a statement, Comcast didn’t explain why it ended the acquisition effort, but added there were provisions in place so it could exit the deal, according to CEO Brian 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,” Roberts said in a statement.
Roberts commended staffs from Comcast and TWC involved with the transaction for their work.
“Throughout this entire process, our employees have kept their eye on the ball and we have had fantastic operating results. I want to thank them and the employees of Time Warner Cable for their tireless efforts,” he said.
In acquiring TWC, Comcast hoped to better position itself in the face of changing consumer technology trends and fend off mounting competition from online streaming services. Cable providers offer video, high-speed Internet and voice services, often as a bundle, sold in large part to residential customers as well as businesses. As the number of wired telephone subscribers and cable TV customers declines, the cable operators face increasing external competition, among other issues, which prompted the merger attempt, according to IBISWorld technology analyst Sarah Kahn.
Kahn said the Federal Communication Commission's recent reclassification of high-speed Internet as a telecommunication service and utility, instead of information service, created an additional roadblock for the industry’s plans for further monetizing high-speed Internet. The ruling allows the FCC to ensure that no content is blocked and that the Internet is not arbitrarily divided into express lanes and slow lanes.
"In the face of shifting consumer preferences, rising competition and regulatory oversight, the failure of this deal would further limit Comcast and Time Warner’s ability to control their market, potentially limiting the company’s revenue growth," Kahn wrote in a note.
To “Stop Mega Comcast Coalition,” a consortium of advocacy groups and businesses (including Dish Network) opposed to the deal, Comcast’s decision was welcomed.
"Today’s news that Comcast has ended its effort to create Mega Comcast through the acquisition of Time Warner Cable is a tremendous victory for consumers, competition and innovation,” the coalition said in a statement.
The deal appeared to be in jeopardy April 23 after being submitted to the FCC for review.
“The FCC and DOJ are to be commended for conducting a fair, fact-based review process that has upheld the law and served the interests of the public,” the group said.