by Agnes Constante
Broadband company Comcast abandoned its $45 million bid to acquire Time Warner Cable on Friday, April 24 after facing fierce opposition from consumers and a likely veto from US regulators.
A consolidation of the nation’s two largest cable companies would have created a truly national cable company with unprecedented power over the future of America’s television and broadband markets. Had the deal pulled through, the resulting company would have had control of about 30 percent of pay television service up to 57 percent of America’s broadband market, along with NBCUniversal, which Comcast aquired in 2011.
“The proposed merger would have posed an unacceptable risk to competition and innovation, including the ability of online video providers to reach and serve consumers,” Tom Wheeler, Federal Communications Commission chairman, said in a written statement.
The Justice Department said it had grave concerns that the proposed acquisition “would make Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers,” which served as the reason Comcast aborted its bid.
Some politicians, media company executives, and consumer and industry groups criticized the proposed merger, expressing worries that the resulting entity would gain too much control of what Americans watch on TV and do online.
With a national platform, Comcast would have managed to create a rival to streaming services like Netflix that pose a threat to the traditional television business. It may have also prevented television networks from establishing their own streaming services by pressuring them into holding back programming. Simultaneously, the company would have control of the broadband networks required for those services.
“This is a major victory for consumers who stood up against a media Goliath and won, and a major victory for everyone who wants a fair and competitive marketplace,” Marta Tellado, CEO of Consumer Reports, said in a statement. “Comcast never was able to make a convincing case for why the merger would benefit anyone other than Comcast.”
Comcast argued that its acquisition of Time Warner would allow for better video services and faster service to more Americans. Critics, however, said consumers would have ended up paying more money for declining service.
The Greenlining Institute, which has campaigned to stop the proposed merger, applauded Comcast’s announcement.
“This merger would have been bad for everyone, but particularly terrible for people of color and low-income consumers,” said Greenlining Institute Executive Director Orson Aguilar. “Federal and state regulators did the right thing by giving this deal close, careful scrutiny, and as a result, low-income consumers and communities of color won a huge victory today.”
Aguilar also added that more needs to be done to make broadband service available and affordable to all consumers.
On Friday, both companies said they would move forward after investing a significant amount of time and resources for 14 months toward the failed transaction. Comcast spent $237 million toward the effort in 2014.
“We have to live with it, and respect that, and move on,” Comcast chairman and CEO Brian Roberts said in an interview on CNBC. “We always structured this deal in a way that would enable us to walk away,” Roberts said in an interview on CNBC.
Critics also said the consolidation of the companies would lead to a lack of independent and diverse voices in television. Additionally, Comcast was scrutinized for failing to fulfill commitments it promised in former deals, such as the NBCUniversal transaction, The New York Times reported.
U.S. Attorney General Eric Holder said the decision is the best outcome for American consumers.
“This is a victory not only for the Department of Justice, but also for providers of content and streaming services who work to bring innovative products to consumers across America and around the world,” he said in a statement.
Although the deal between Comcast and Time Warner has been nixed, cable companies are expected to continue pushing to consolidate as the costs of movies, shows and sports they provide to subscribers rise, while the number of video customers decreases.