Business

Comcast abandons $45bn Time Warner Cable deal

Comcast van Image copyright AP

US cable giant Comcast has abandoned its planned $45bn (£30bn) purchase of Time Warner Cable after failing to convince regulators the deal would not harm competition.

"Today, we move on," said Comcast chairman Brian L Roberts.

"We structured this deal so that if the government didn't agree, we could walk away."

In March last year, the US Department of Justice (DoJ) launched an antitrust probe into the deal.

"The companies' decision to abandon this deal is the best outcome for American consumers," said Attorney General Eric Holder in a statement.

"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."

The deal was also being scrutinised by the Federal Communications Commission, and had been criticised by some politicians and various consumer and industry groups.

Shares in Comcast declined slightly on the news, whereas Time Warner Cable's were up slightly.

Industry challenges

Comcast and Time Warner Cable are the two biggest cable companies, as well as two of the largest broadband providers, in the US.

Comcast had argued that they served different markets and a merger would not reduce competition for consumers.

The company operates mainly around Washington DC, Chicago, Boston and its home town of Philadelphia, whereas Time Warner Cable's subscribers are mainly grouped around its New York headquarters, Los Angeles, Milwaukee, and Dallas.

While the move is a blow for Comcast, with the industry experiencing a decrease in subscribers and video customers, cable companies are likely to keep merging as costs rise for shows, sports programmes and film rights.

However, the collapse of this deal has knock-on effects for other players in the US industry.

Charter Communications, the fourth largest cable operator in the US, will no longer acquire some of the Time Warner Cable markets that Comcast was planning to divest.

Charter had previously tried to buy Time Warner Cable in a hostile takeover in January 2014.


Analysis: Kim Gittleson, New York business reporter

When Comcast first announced its intention to merge with Time Warner last year, the move was met with a largely negative outcry from a crucial contingent: subscribers of both cable companies.

The Federal Communications Commission - one of the regulators tasked with approving the deal - received more than 100,000 public comments on the merger, many of which were from individuals concerned about the impact it could have on prices and quality of service.

The two firms are notorious for a perceived poor handling of customer service complaints.

Last summer, a customer service call with Comcast, in which customer Ryan Block tried to cancel his internet service, went viral - which many took as a symptom of widespread customer frustration with US telecommunications providers.

Even in Comcast's home city of Philadelphia, sentiment against the firm has soured.

In December, the city published a report on Comcast's offerings in which the most common words among subscribers who were surveyed about their customer experience were "terrible", "better", "poor", "horrible", "awful", "lacking", "bad" and "horrendous".

Although Comcast has disputed the Philadelphia report - and chalked up Mr Block's viral call to the power of the internet - the widespread customer complaints couldn't have helped the firm in its negotiations with the government.

Certainly, that public sentiment influenced US politicians. This week, six US Senators wrote a letter to regulators arguing against the merger.

But with increasing number of consumers "cutting the cord" and foregoing cable subscriptions entirely in favour of internet streaming options, the question is whether or not the US cable industry, as it is currently structured, can survive.

That would leave very little to complain about.


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