Can Comcast Corporation (NASDAQ:CMCSA) Save Merger Deal With Time Warner Cable Inc (NYSE:TWC)?

Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc (NYSE:TWC) intends to meet for the first time on this Wednesday with officials of Justice Department to discuss potential alternatives to keep the $45.2 billion merger deal on track. The two companies haven’t met face to face in last fourteen months since the agreement was announced.

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The concerns

Staffers at both the Federal Communications Commission and the Justice Department are concerned about the potential deal. They believe that the combined entity formed after Comcast and Time Warner merger would get too much power and a greater market share in the broadband industry. It will provide them with an unfair competitive edge against TV channel owners and other new companies that provide video programming online.

The options

The Federal Communications Commission plans to designate the merger deal for a hearing. It is one of the options that FCC can opt for to sort out the matter. A hearing would put the merger deal between Comcast and Time Warner in the hands of an administrative judge. It would be considered as an indication that the FCC is not convinced with the proposed deal. Robert McDowell who is a former Republican FCC commissioner said that merger proposals are never forwarded to hearing so as to approve them They are put for a hearing to kill them.

The impact

Combining the U.S. two largest internet and cable providers would result in a company with control more than 30% of the pay-TV market. It will also have control of almost 57% of the broadband service market. Comcast and Time Warner have presented the merger as a straightforward cable deal that doesn’t minimize customer choice since cable operators firms don’t overlap geographically. However, the increased market share that the combined entity will have in broadband Internet has been under deep scrutiny.

About the Author

Cooper is a graduated from Buffalo State College in New York with a bachelor's degree in Broadcast Journalism.

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