WASHINGTON, April 24, 2015 – Like Monty Python’s famous parrot, the highly controversial marriage between cable and media giants Comcast and Time Warner is no more, effectively killed off by the trust-busting efforts of the Obama Department of Justice (DOJ). Numerous sources, including the Wall Street Journal and Comcast-owned CNBC, detailed the final outcome Friday morning, confirming the suspicions we raised in a CDN column last week.
The no-go decision, apparently reached during a meeting of Comcast’s board of directors Thursday evening, was confirmed in a CNBC interview with that company’s CEO, Brian Roberts, who stated flatly that it was “the judgment that we heard and the government had reached.”
According to Deadline, Roberts “declined to say whether the views of the Justice Department and FCC were shaped by reports that Comcast influenced its partners at Hulu to not auction off the online service, potentially turning it into a cable competitor.”
As news that the Comcast-Time Warner deal had been scuttled traveled over the wires Friday morning, Comcast stock (symbol: CMCSA) was up slightly, while Time Warner Cable (TWC) was up sharply—$3.20 per share or + 2.15 percent—on very heavy volume as of 11:30 a.m. EST. Trading patterns indicate that investors may be speculating on a new bid for Warner by rival cable company Charter Communications (CHTR), which has expressed continuing interest in a deal.
“Comcast also delivered a ‘notice of termination’ to Charter,” according to Deadline, “ending a collection of contingent deals that would have made it the No. 2 cable company — especially in middle America — and created a joint venture they expected to call GreatLand Connections. Charter’s agreement to buy Bright House Networks also was contingent on Comcast consummating its deal with TWC.”
Companies that opposed the Comcast-TWC merger include Discovery, Dish Network and Netflix, all of which saw the move as monopolistic. The DOJ seems to have agreed, throwing numerous obstacles in the deal’s path and ultimately making it pointless for Comcast to continue.
Outgoing Attorney General Eric Holder hailed the final outcome as being “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.”
Adding to the chorus was FCC Chair Tom Wheeler, who concluded that the deal’s termination was in the best interests of consumers.”
In addition to Comcast’s direct competitors, writers and media organizations lined up to praise the outcome as well. A Dish Network representative called it “the best possible outcome for consumers, while Writers Guild of America (East) chimed in with a statement noting that writers’ work (and presumably paychecks) would be “diminished by the increased power of content-and-distribution behemoths like the proposed Comcast/NBCU/TWC.”
Already fed up with the ever-increasing costs of home entertainment and broadband services—often attributable to a lack of competition in the industry—the public at large seems unperturbed by this outcome at the very least. This would seem to indicate that for once, at least, the current administration in Washington has been responsive to public sentiment, determining that broadcast, entertainment and broadband mega-mergers would severely hinder rather than hasten a new era of more reasonable prices.
At the turn of the last century, trust-busting Teddy Roosevelt gained fame and notoriety for reigning in all-powerful banking, transportation, oil and steelmaking monopolies. Entertainment/broadband monopolies today are in much the same too-powerful position, putting potential business combinations in that multifaceted industry in an uncomfortable spotlight—something again made clear today by the actions of the DOJ.
UPDATING: Dow Jones confirmed Friday afternoon that Charter Communications (CHTR) is once again pursuing a combination with Time Warner Cable (TWC). CDN will provide updated stories as information becomes available.