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Business News/ Companies / People/  Comcast drops Time Warner Cable bid after antitrust pressure
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Comcast drops Time Warner Cable bid after antitrust pressure

The collapse opens door for other offers for Time Warner Cable, casts heightened regulatory risk on merger activity in US cable industry, which has been rapidly consolidating in the face of competition from satellite TV, Web-based services

A file photo of pedestrians walk past a Time Warner Cable customer service center in New York. Comcast Corp abandoned its $45 billion offer for Time Warner Cable Inc after US regulators raised concerns that the deal would give Comcast an unfair advantage in the cable TV and Internet-based services market. Photo: Joshua Lott//ReutersPremium
A file photo of pedestrians walk past a Time Warner Cable customer service center in New York. Comcast Corp abandoned its $45 billion offer for Time Warner Cable Inc after US regulators raised concerns that the deal would give Comcast an unfair advantage in the cable TV and Internet-based services market. Photo: Joshua Lott//Reuters

Comcast Corp. abandoned its $45 billion offer for Time Warner Cable Inc on Friday after US regulators raised concerns that the deal would give Comcast an unfair advantage in the cable TV and Internet-based services market.

The collapse of the deal opens the door for other possible offers for Time Warner Cable, but also casts heightened regulatory risk on merger activity in the US cable industry, which has been rapidly consolidating in the face of competition from satellite TV and Web-based services.

The proposed acquisition had faced criticism from some politicians, media company executives and consumer and industry groups, who had worried it would create a monolith with too much control over what Americans do online and watch on TV. Comcast had argued the merger would bring faster service and better video services to more Americans.

“The pressure to consolidate in a very competitive industry is going to continue," Maxim Group analyst John Tinker said.

Charter Communications Inc lost out on a bid for Time Warner Cable last year, and Charter’s controlling shareholder, Liberty Media Corp, had since indicated continuing interest.

“We believe that TWC will get a bid from Charter in the next three months, which we expect to be lower than the market expects," Needham analysts said in a note. The analysts said they expected the opening bid at $130 to $135 per share.

Time Warner Cable shares last traded at $152.52, up 2.5% on the day. Comcast shares were up 0.15% at $59.32 and Charter shares were down 0.8% at $182.18.

Anti-competitive concerns

The Comcast-Time Warner Cable merger would have created a company controlling almost 30% of the U.S. pay-TV subscribers, following promised divestitures, and would have provided high-speed Internet access to almost 40% of Americans, according to SNL Kagan data.

Federal Communications Commission Chairman Tom Wheeler said on Friday that the merger would have posed an “unacceptable risk to competition and innovation."

US attorney general Eric Holder said the companies’ decision to abandon the deal was “the best outcome for American consumers."

Comcast had argued that the Time Warner Cable deal would not be anti-competitive because the companies had no real geographic overlap. The company had also proposed to divest some assets to help address regulatory concerns.

The collapse of the deal is a setback for Comcast Chief Executive Brian Roberts.

“Today, we move on," he said in a statement.

Supantha Mukherjee contributed to this story.

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Published: 25 Apr 2015, 01:53 AM IST
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