Maybe there is hope for civilization after all. It is not everyday that Comcast is told, “no”. But that’s just what happened late last week.
Comcast is officially walking away from plans to acquire Time Warner Cable, after regulators signaled their displeasure with the deal.
“Today, we move on,” Comcast Chairman and CEO Brian Roberts said in a statement. “Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away.”
The deal almost seemed like a foregone conclusion when Comcast announced its $45.2 billion Time Warner Cable acquisition plan last year. It is well known that the cable giant spends more money on lobbying in Washington than any other company and in fact dumped $17 million into its lobbying efforts in 2014 alone.
But ultimately, the U.S. Department of Justice and the Federal Communications Commission had much too many concerns about the acquisition, which would have given the combined companies as much as 57 percent of the broadband market and nearly 30 percent of the pay TV market, That is scary.
One concern that apparently emerged was the role that Comcast allegedly played in preventing a sale of Hulu, which is co-owned by Comcast, 21st Century Fox, and Disney. Comcast was supposed to stay out of any Hulu business dealings as a condition of acquiring NBCUniversal (which co-owned Hulu) in 2011. However it has been suggested that Comcast influenced the sale process by assuring Fox and Disney that it would help turn Hulu into a platform for the cable industry. This became a particular issue for the Justice Department as it considered potential merger conditions for Comcast and Time Warner Cable.
Why This Decision is the Correct Decision
Although Comcast and Time Warner don’t operate in the same market — and therefore aren’t direct competitors the combined company would have too much bargaining power in TV carriage agreements, content licensing and interconnection deals for Internet services. Comcast said the acquisition would have lead to better service for customers, but somehow not many people believed that.