Comcast, Time Warner Cable Abandon $45 Billion Merger Deal

Comcast Rumored To End Merger Bid With Time Warner Cable
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By Devika Krishna Kumar

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

The proposed deal 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.

%VIRTUAL-pullquote-The companies' decision to abandon this deal is the best outcome for American consumers.%"The companies' decision to abandon this deal is the best outcome for American consumers," U.S. Attorney General Eric Holder said in a statement.

Comcast had argued that the deal wouldn't be anti-competitive because the companies had no real geographic overlap. The company had also agreed to divest some assets to help smooth the deal through the regulatory process.

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

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

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

The abandoned deal leaves open the possibility of an offer for Time Warner Cable by John Malone-backed Charter Communications (CHTR), which bid for the company last year.

Charter Communications was also involved in the Comcast-Time Warner Cable deal, having agreed to take on some subscribers divested by the merged company.

Malone, a cable pioneer known as the "cable cowboy," was asked in November whether he would pursue Time Warner Cable if the Comcast deal fell through. "Hell yes," he responded.

"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 U.S. cable industry has been rapidly consolidating as it grapples with the rising popularity of satellite TV and Web-based entrants such as Netflix (NFLX).

Time Warner Cable (TWC) shares were up 3 percent in early trading, while Comcast (CMCSK) shares up 0.3 percent. Charter shares were unchanged.

-With additional reporting by Supantha Mukherjee.