[Infowarrior] - Comcast, Time Warner agree to merge in $45 billion deal

[Richard Forno]

Comcast, Time Warner agree to merge in $45 billion deal

By Cecilia Kang

http://www.washingtonpost.com/business/economy/comcast-time-warner-agree-to-merge-in-45-billion-deal/2014/02/13/7b778d60-9469-11e3-84e1-27626c5ef5fb_story.html

Comcast has agreed to buy Time Warner Cable for more than $45 billion in stock, a deal that would combine the two largest cable providers in the country, according to people familiar with the matter.

The combined company would be a communications juggernaut with far greater influence than any of its peers. It would not only control the “last mile” connections that pump cable and internet services into  homes and businesses, but also a huge swath of the content that travel through those pipes since Comcast already owns the entertainment empire of NBC Universal.

The proposed merger is expected to receive close scrutiny from federal anti-trust regulators who will focus on whether the merged company would have too much market share — or whether it could stifle content creators and online video companies such as Netflix. Separate from that review, the Federal Communications Commission would have a much broader mandate to determine if the deal is in the public’s interest.

To head off regulatory concerns, Comcast plans to offer shedding around 3 million subscribers in order to keep its ownership of the entire cable marketplace below 30 percent, a figure television programmers say is the threshold for competition in licensing negotiations, according to a person familiar with the deal, who spoke on condition of anonymity because the deal was not final.

Before any diverstment of customers, the deal would create a behemoth with 34 million cable subscribers in most major metropolitan areas, including Time Warner Cable’s home, the New York tristate region. With its broader reach, the combined company would also have more negotiating power with network broadcasters that rely on cable companies to distribute their content, critics say.

Already, consumer groups are protesting the merger. Just two years after Comcast’s controversial merger with NBC Universal was approved, public interest groups say consumers have steadily suffered from increased monthly cable bills and few options for alternative broadband providers.

“Comcast will have unprecedented market power over consumers and an unprecedented ability to exert its influence over any channels or businesses that want to reach Comcast’s customers,” said Matt Wood, policy director at public interest group Free Press..

Comcast and Time Warner Cable don’t have overlapping markets, so antitrust regulators won’t view the merger with the same concerns they did with AT&T’s proposed bid with T-Mobile, experts say. That deal, which regulators rejected, would have eliminated a major national carrier and given consumers across the country fewer options.

When it acquired NBC Universal in 2011, Comcast agreed to so-called net neutrality conditions that prevent it from prioritizing its own content over a competitor such as Netflix. Comcast is expected on Thursday to offer similar restrictions in its merger with Time Warner Cable, according to a person familiar with the deal.

Some antitrust experts say such voluntary conditions that create a level playing field for Web video providers such as YouTube and Netflix will appease antitrust regulators.

“They don’t compete directly for the business of pay TV consumers. Therefore the number of competitive choices for consumers will not change,” said Seth Bloom, a former general counsel of the U.S. Senate Antitrust Subcommittee. “The FCC approval is somewhat more uncertain.”

If the boards of both companies approve the marriage and it passes regulatory scrutiny, the deal could close before the end of the year, a person familiar with the deal said.

The price per share of $158.82 is about 17 percent above where Time Warner Cable shares’ closed in regular trading Wednesday.

The merger trumps a proposal by Charter Communications to buy Time Warner for about $38 billion in cash and comes just a day after Charter said it was preparing a hostile take-over of Time Warner by proposing to replace its bo


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