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Report: Comcast Ending Time Warner Cable Acquisition Effort

23 Apr, 2015 By: Erik Gruenwedel

Comcast reportedly is planning to drop its bid to acquire Time Warner Cable due to ongoing regulatory issues, according to a Bloomberg Business report, which cited sources familiar with the situation.

Ever since Comcast announced its $45.2 billion acquisition of Time Warner Cable Feb. 13, 2014, opponents contend the union would give Comcast too much control of the Internet into domestic households.

When the Federal Communications Commission April 22 held a hearing on the matter, pundits suggested the deal was dead. That’s because the hearing essentially put the fate of the merger into the hands of an administrative law judge, which suggested a lack of regulatory support.

“Mergers are never put to hearing in order to approve them. They are designated for a hearing in order to kill them,” former FCC commissioner Robert McDowell told The Wall Street Journal prior to the decision.

The “Stop Mega Comcast Coalition,” a consortium of consumer groups and businesses, had hailed the FCC’s involvement.

“We commend [FCC] Chairman [Tom] Wheeler for setting up a rigorous, fact-based review that weighs all the evidence,” the group wrote in an April 23 email.

Arturo Carmona, executive director of Presente.org, a Latino media advocacy group, said Latino communities were the most vulnerable to merger as it would have combined 19 of the top 21 Latino markets, giving Comcast reach to over 90% of the Latino community.

“The collapse of this dangerous merger would be a giant victory for Latinos, and renew faith in U.S. regulators,” Carmona said in a statement.

Common Cause president Miles Rapoport said the FCC’s involvement and willingness to listen to the public made the difference.

“More than 800,000 Americans told the FCC that the Comcast/Time Warner Cable merger would be bad for competition and innovation. Their arguments were well-founded and have now carried the day. This is their victory,” Rapoport said.

Concerns regarding Comcast becoming the largest Internet service provider has taken on new meaning as over-the-top video services proliferate on the home entertainment landscape.

With Sling TV, followed by Sony’s PlayStation Vue, HBO Now and pending OTT services from Verizon, Showtime and Apple, the threat to the traditional bundled pay-TV ecosystem — Comcast’s main revenue — is snowballing.

Indeed, about 57% of consumers in U.S. broadband households subscribe to an OTT video service, such as Netflix or Hulu Plus, according to Parks Associates.

"The number of hours watching video content continues to rise, exceeding 36 hours per week in 2014, with Internet video accounting for 36% of that time, or about 13.3 hours a week," said Brett Sappington, director of research at Parks.

As OTT video evolves, angst within the tech community, media companies and consumer groups about a combined Comcast/TWC, intensifies.

With President Obama’s public support for net neutrality guidelines — a stance seen by some as a catalyst for the FCC’s new open Internet ruling, similar political support for Comcast/TWC wasn’t expected, according to Richard Greenfield, analyst with BTIG Research in New York.

The analyst cites changing political winds, consumer group protests and Congressional investigation regarding whether Obama influenced the net neutrality ruling.

“We believe the White House will not come to Comcast’s rescue,” Greenfield wrote in an April 20 blog post.

About the Author: Erik Gruenwedel

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