Comcast to meet with regulators in bid to save Time Warner Cable deal

The Justice Department has spent nearly a year trying to determine whether a bulked-up Comcast would choke competition.
The Justice Department has spent nearly a year trying to determine whether a bulked-up Comcast would choke competition.
(Matt Rourke / Associated Press)

Comcast Corp.'s turbulent bid to acquire Time Warner Cable Inc. shifts into high gear this week, some 14 months after the blockbuster $45-billion deal was unveiled.

Company executives plan to meet with U.S. Justice Department officials in Washington on Wednesday to begin in-depth discussions about whether the government’s antitrust concerns are significant enough to torpedo the merger — or if conditions could be fashioned to neutralize possible harms, according to people close to the situation who asked not to be identified discussing confidential matters.

The Justice Department has spent nearly a year trying to determine whether a bulked-up Comcast would choke competition. The Federal Communications Commission separately is considering whether the tie-up is in the public interest.

“When you look at the clout that this company would have and its ability to crush smaller competitors, you see why we need to deny this merger,” Rep. Tony Cardenas (D-Los Angeles), an outspoken opponent of the deal, said Monday. “Talk about dominating the competition.”


Consumers, rival entertainment companies and Internet streaming services have long protested the merger.

But Comcast in recent weeks has suffered several additional setbacks, including a member of the California Public Utilities Commission saying he would not support the deal. The PUC separately is reviewing whether the combination, which would give Comcast 2 million subscribers in Southern California, is in the public interest.

Critics contend that Comcast would use its muscle to stifle new online streaming services, such as Netflix and Hulu, which compete with Comcast’s core business of providing bundles of TV channels.

Regulators are also said to be reviewing whether Comcast meddled in the affairs of Hulu, in which Comcast has a one-third equity stake. Comcast promised not to get involved in Hulu as part of its 2011 agreement with the Justice Department, which Comcast struck to win government approval to take control of NBCUniversal. But some executives long have alleged Comcast applied pressure to abort a plan to sell Hulu two years ago, a claim that Comcast has denied.

“The sheer size and scope of a combined Comcast/Time Warner Cable, coupled with its incentive to protect its core video business from innovative ‘over-the-top’ online video providers, would allow it to threaten nascent competition in so many different ways,” a coalition of high-profile opponents said Friday in a letter to FCC Chairman Tom Wheeler.

Another sticky issue is high-speed Internet market share. Comcast routinely provides Internet speeds of 25 megabits per second, which meets the FCC’s recently adopted standard. Under that definition, Comcast’s market share would reach 57% of the U.S.

However, it was just last year that the FCC defined high speed as 10 megabits per second. Under that definition, Comcast’s market share would total 40%.

The company argues that it should not be penalized for the FCC’s change in the measuring stick, particularly when it is one of the few companies in the U.S. to routinely offer some of the fastest speeds around.


“The Comcast/Time Warner Cable transaction will result in significant consumer benefits — faster broadband speeds, access to a superior video experience, and more competition in business services resulting in billions of dollars of cost savings,” Comcast spokeswoman Sena Fitzmaurice said in a statement.

Comcast has argued that because consumers would not see a reduction in the number of providers, the deal should not be considered anti-competitive.

“The regulatory process remains fluid,” Time Warner Cable said this week in a statement. “We believe the transaction is pro-competitive, in the public interest and that there is no basis for regulators to block the deal.”

Wall Street shrugged off reports that the deal might be in jeopardy. Shares of Comcast rose 5 cents, or less than 0.1%, to $58.47, while Time Warner Cable shares closed up $1.26, or 0.8%, to $150.87.


“It is impossible to judge how strong the case is against the merger or how likely it is that concerns can be remedied with conditions,” Paul de Sa, a media analyst at Sanford C. Bernstein & Co., wrote Monday in a report.

One critic of the deal, Paul Goodman, legal counsel for the Greenlining Institute, agreed it is too soon to predict an outcome.

“The deal seems to be in trouble, but that just means that Comcast will double down,” Goodman said. “The fight is far from over.”