In Reversal, Comcast to Walk Away From Mega-Merger with Time Warner

Why the $45 billion merger between the two cable and Internet giants hit the skids, and why that is good news for consumers.

In Reversal, Comcast to Walk Away From Mega-Merger with Time Warner Photo (cc) by Free Press Pics

Comcast Corp. reportedly is halting its efforts to take over Time Warner Cable Inc. amid mounting opposition from regulators.

The $45 billion merger, which would have combined the two largest cable operators in the United States, has been in the works for more than a year. It’s faced intense scrutiny from both the Federal Communications Commission and the Justice Department about whether the merger would be in the public interest, The New York Times reports.

Some lawmakers, public advocacy groups, and media and technology companies had rallied against the merger, saying it would invest too much power and market share in one company. The combined company would have controlled just under 30 percent of the pay television subscribers and 35 to 50 percent of the nation’s broadband Internet service, depending on how regulators define the market.

Although many people believed the merger was essentially a done deal, it hit a wall late Wednesday when the FCC recommended that the issue be moved to a hearing before an administrative law judge, the Times said.

“That is a fatal bullet to the heart of the deal,” former FCC Commissioner Robert M. McDowell told the Times.

McDowell said the hearing would be a drawn-out process that would inevitably end up in the proposed merger deal being blocked.

Critics of the merger, including proponents of net neutrality, said allowing Comcast and TWC to merge would have given them too much control over the nation’s access to the Internet and television, according to The Hill.

Opponents maintained that allowing Comcast that much control “added to the fact that Comcast owns NBC Universal and its slate of channels and other programming — would have given it both the ability and incentive to block competing cable companies and content providers,” the Hill said.

Comcast said the merger would benefit consumers by giving them more choice. Sen. Al Franken, D-Minn., was quick to shoot down that argument on “CBS This Morning”. He said the merger would create a “giant company, unprecedented in size.”

“This would be less choice, less competition,” Franken added.

A formal announcement from Comcast was expected Friday.

Comcast’s abandonment of the proposed merger would be a big win for net neutrality. Need a reminder on why it’s important that the Internet remain open, instead of “pay to play?” Check out “Why Net Neutrality is Important.”

What do you think of Comcast’s plans to bail on the merger with TWC? Sound off below or on our Facebook page.

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