Two of America’s most-hated companies have finally called off their merger attempt. That is to say that last week Comcast officially stated that it was abandoning a merger attempt with Time Warner Cable due to regulatory pressures. Both the Department of Justice and the Federal Communications Commission had been investigating the proposed merger on antitrust grounds over the course of 14 months.
The merger would have formed an enormous internet and cable provider whose competition-crushing powers would have mimicked Rockefeller himself. Both regulators and consumers were concerned with the creation of such a powerful company controlling both television and streaming internet rates.
Attempts by the FCC to assist the companies in finding a way to structure a merger that allowed fair competition among cable and internet providers only ended in frustration. Attorney General Eric Holder even gave permission to file a suit against the companies if they were to proceed with the process any further.
For over a year, Comcast and TWC had been lobbying intensely to gain some influence over the FCC and Do, but their attempts were in vain. Both companies contributed a total of $5.9 million during the 2014 election cycle in an attempt to make some new friends, but it resulted in minimal support. Congress has no direct influence over the approval process, but the hope was to obtain letters of support that would show positive public interest in the merger. Campaign funds may have been transferred, but it seems that they did not generate enough actual interest to keep the merger alive.
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Consumers may be relieved by the merger cancellation, but the reality for current customers of both broadband internet and cable TV in the US is a veritable monopoly. Depending on geography as specific as a house number, certain providers simply can’t access customers. This has left many with the choice of one major company like Comcast or TWC, or nothing. If lack of choice weren’t bad enough, both companies have steadily increased pricing for services while racking up terrible track records in customer service. The result of muscling out competition, raising pricing, and failing to provide satisfactory customer service has been mass negative attention for both firms. It could well be argued that the FCC and DoJ were so resilient in resisting the merger because they were well aware of how displeased the public already was with the existing companies.
Moving on after a $45 billion failure
Comcast CEO, Brian Roberts, stated that both companies had done their best to state their case in favor of the merger, but his company had to face the facts and move on. Time Warner Cable also made optimistic statements that they would be getting back to business as usual now that they knew a merger would be legally impossible. Such statements leaves one wondering where Comcast and Time Warner should move on to.
Some analysts have asked whether T-Mobile or other communications companies are up next for Comcast’s merger attempts. I think Comcast will have to sit out a round. Of the two companies involved in the failed merger, Comcast is the company that already has immense control over pay-tv. Any attractive buy-out companies would put Comcast in the same position of facing extreme FCC and DoJ scrutiny and/or rejection. More realistically, Time Warner is still capable of buying up some smaller competitors CableVision. For now, it seems that much of the negative attention has been focused on Comcast and its power, leaving TWC to walk away with plenty of growth potential. Comcast is frankly boxed in for the time being, but TWC could be at the cusp of another big move any day now.