Comcast Calls Off Merger With Time Warner Cable
STEVE INSKEEP, HOST:
Comcast has pulled the plug on its $45 billion plan to take over Time Warner Cable. This proposed merger was one of last year's biggest. And it ran up against stiff opposition from regulators who were concerned the combined company might not be in the best interest of consumers. NPR's Yuki Noguchi is following the story. She's in our studious. Welcome to the program, Yuki.
YUKI NOGUCHI, BYLINE: Good morning, Steve.
INSKEEP: What went wrong here?
NOGUCHI: Well, regulators didn't like the deal. The Federal Communications Commission told the companies this week that it had problems. It - what it was planning to do was refer the case to a hearing, which would have resulted in a protracted legal process. And in the industry, such referrals of cases to a judge are treated as something of a death knell. So it's not unusual for, then, the parties to withdraw their merger.
INSKEEP: So the FCC didn't like this. The Justice Department, I guess, also looks at antitrust questions.
NOGUCHI: That's right. The FCC reviews deals for consumer impact. And the Justice Department looks at it from a perspective of how the merger might affect competition. Now, in this deal, Time Warner Cable and Comcast are both big cable providers. But they also create a lot of content. Remember that Comcast a couple of years ago absorbed NBC Universal.
NOGUCHI: Add to that the fact that both companies are also big players in the market for high-speed Internet connections. And it's really that market, the high-speed Internet market, that was the deal-breaker here. Both the FCC and the Justice Department were concerned about creating such a huge player in broadband.
INSKEEP: Well, now, this is really fascinating because even though the Internet is a free-for-all with countless providers of content, there are relatively few big providers who are fighting to control the plumbing, to control the broadband that gets into your home or your office. So how was it that the companies thought that they'd get away with this?
NOGUCHI: On the cable properties, they said there's very little geographic overlap. And, of course, they were prepared to make some concessions - you know, selling assets or properties in markets where they might have been dominant.
INSKEEP: Oh, geographic overlap, meaning that most places only have one cable company anyway.
NOGUCHI: One dominant cable provider, that's right. The companies also spent a great deal of money lobbying to make this argument and trying to get this deal through. But, of course, as time went on and review was still going on, it became clear that the Justice Department and the FCC were not going to approve the merger in the way it had been presented. And this morning, Comcast CEO Brian Roberts tried to put the best face on it. In a press release, he said the companies structured the deal so that if it didn't go through, they could walk away. And that's exactly what they did today.
INSKEEP: Can you take this back to my living room now, Yuki Noguchi? You mentioned that most people have just one cable company anyway. But there's so much competition for people to get television and other kinds of entertainment through other means. How does this all relate to the wider churn in the cable industry and the Internet industry?
NOGUCHI: Well, one of the big things that you're seeing in the video market is that more networks are offering streaming online video that does not require you to buy a cable package. And, you know, obviously we've had Netflix and Amazon and Hulu. But now you're also seeing networks like HBO and Showtime starting to offer their own separate streaming packages. These are channels that were once of course the main anchors of premium cable packages. So consumers and consumer advocates have long been asking for this kind of a la carte service. A lot of people don't want to pay for hundreds of channels that they never watch. And now that's starting to happen in the industry. And that's why you saw Verizon, for example, make that move. Consumer advocates lobbying against this deal said they were concerned that creating such a big cable behemoth would slow that trend. And, in fact, the Justice Department today said much the same thing, calling the demise of this deal a victory. It said the merger would have turned Comcast into a, quote, "unavoidable gatekeeper" between consumers and these new Internet-based services.
INSKEEP: Yuki, thanks as always.
NOGUCHI: Thank you.
INSKEEP: That's NPR's Yuki Noguchi.
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