Comcast Drops $45 Billion Bid For Time Warner Cable

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Comcast called off its pending merger with Time Warner Cable Friday morning. Regulators were concerned that a combined company would control too much of the market for broadband Internet service.

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Transcript

ROBERT SIEGEL, HOST:

Comcast has called off its plan to merge with Time Warner Cable. After 14 months of deliberations, regulators made clear that they were not going to approve the $45 billion deal. The Federal Communications Commission and the Justice Department appeared to have been driven by concerns that the combined company would have stifled the emerging online video market. NPR's Yuki Noguchi reports.

YUKI NOGUCHI, BYLINE: Comcast's CEO, Brian Roberts, has steadily grown his company's empire over the years, but he says now its growth will have to hinge on something other than buying its No. 2 rival.

(SOUNDBITE OF CNBC INTERVIEW)

BRIAN ROBERTS: The government came to its conclusion, and we have to respect that and move on.

NOGUCHI: He was speaking on CNBC, which, interestingly, Comcast owns through its acquisition a couple of years ago of NBC Universal. During that interview, Roberts highlighted other parts of the business that are doing well, from theme parks to movies and television shows. It's that very vastness of the two cable companies' businesses that raised concerns. A combination would've created a massive cable provider with a huge movie and entertainment business and unprecedented control over consumers' Internet access. Roberts denies a merged company would have abused that power by interfering with Internet speed or access. Doing so would violate the principle of net neutrality, which the Obama administration supports.

(SOUNDBITE OF CNBC INTERVIEW)

ROBERTS: We do respect that customers want certain openness and ability to go wherever they want, and we've always said we're for that.

NOGUCHI: Nevertheless, broadband access concerns seem to be the sticking point for both the FCC and the Justice Department, which were prepared to refer their cases to the court system if the companies hadn't backed down. In his statement, FCC Chair Tom Wheeler said a combined company, quote, "posed an unacceptable risk to competition and innovation, including to the ability of online video providers to reach and serve consumers." Attorney General Eric Holder also called the deal's failure a victory for online video. And what's happening with online video is in fact a big part of what's shaking up the old cable television model. In addition to Netflix, Amazon and Hulu, networks like CBS, HBO and Showtime are pitching subscription services that don't require a consumer to buy a large package of cable channels.

JASON MOSER: The regulators see that we're in the midst of this Internet/TV revolution, and it's plain as day.

NOGUCHI: Jason Moser is an analyst with The Motley Fool.

MOSER: The traditional cable model that we've known for the past 20 to 30 years I think is more or less sunsetting. It is happening right in front of our very eyes.

NOGUCHI: But, he says, cable companies still control one of the few conduits to the consumer. And that creates an incentive for them to interfere with their online upstart rivals.

MOSER: I think the fear was they would be able to charge more to Netflix and Amazon in order to be able to use those pipes.

NOGUCHI: Delara Derakhshani, a lawyer with advocacy group Consumers Union, agrees.

DELARA DERAKHSHANI: Online video has the potential to be an attractive alternative to existing high cable rates. And its continued existence and sustainability depends on the ability to reach consumers.

NOGUCHI: And, Derakhshani says, Comcast and Time Warner Cable already rank low in consumers' estimation for customer service. She says nearly a million of them sent letters to the FCC opposing the deal. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.