Fourteen months after unveiling a US$45.2 billion merger that would have created a new Internet and cable giant, Comcast Corp is planning to walk away from its proposed takeover of Time Warner Cable Inc, people with knowledge of the matter said.
Opposition from the US Department of Justice and US Federal Communications Commission (FCC) took shape over the past week, leaving officials of the two companies to conclude the deal would not go through.
Comcast’s board was scheduled to meet on Thursday to finalize the decision, said one of the people, who asked not to be identified because the information is private. Time Warner Cable executives plan to tell shareholders in an earnings conference call on Thursday next week how the company can survive independently, the person said.
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The deal’s collapse, a major setback for Comcast chief executive officer Brian Roberts, sets off a cascade of recalculations in the businesses of broadband Internet, and delivery of television and movies. Comcast must regroup to focus on adding more Internet subscribers and defending its pay-TV business, while Time Warner Cable could pursue other possible merger partners, such as John Malone’s Charter Communications Inc.
“It’s the end of one chapter, but the beginning of another,” MoffettNathanson analyst Craig Moffett said. “The pace of cable consolidation is likely to accelerate rather than decelerate. It’ll just be Charter rather than Comcast leading the charge.”
The deal’s demise promises to strengthen the hand of online players like Amazon.com Inc, Netflix Inc and others providing programming over the Internet.
Philadelpia-based Comcast, the largest US cable provider, faced scrutiny in Washington over whether it complied with agreements made in its 2011 acquisition of NBCUniversal.
The US Department of Justice had been reviewing whether Comcast was too actively involved when co-investors 21st Century Fox Inc and Walt Disney Co tried to sell Hulu in 2013, people familiar with the matter said earlier. Comcast agreed to be a passive investor in Hulu when it acquired a stake in the company through the NBCUniversal purchase.
On Wednesday, FCC staff joined lawyers at the Department of Justice opposing the transaction. That day, FCC officials told representatives of the two companies they are leaning toward concluding that the merger does not help consumers, a person with knowledge of the matter said.
The FCC’s plan to call a hearing effectively killed the deal’s chances of success. An FCC hearing can take months to complete and drag out the approval process beyond the companies’ time frame for completion.
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