Updated at 9:40 a.m. ET
Comcast Corp. announced today that it’s ending its merger agreement with Time Warner Cable – after the Justice Department raised concerns over a deal.
“Today, we move on,” Comcast Chairman and CEO Brian L. Roberts said in a statement. “Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away.”
The Justice Department in a statement said it had raised “significant concerns” with the two companies over the approximately $45.2 billion deal, noting that a “merger would make Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers.”
Attorney General Eric Holder called today’s news “the best outcome for American consumers.” He said it was a victory for “providers of content and streaming services.”
As recently as this week, company officials hoped a merger would go through despite opposition from Justice Department staff members. But as NPR’s Yuki Noguchi reported on Morning Edition, “The Federal Communications Commission told the companies this week that it had problems with the deal.”
“What it was planning to do, was refer the case to a hearing, which would’ve resulted in a protracted legal process,” she said. “In the industry, such referrals of cases to a judge are treated as a death knell…and it’s not unusual for the parties to withdraw their merger.”
As The Associated Press reports, “Combining the No. 1 and No. 2 U.S. cable companies would have put nearly 30 percent of TV and about 55 percent of broadband subscribers under one roof, along with NBCUniversal. That appeared to be too much concentration for regulators.”
The New York Times adds that “the air of inevitability that once hung over the deal had been dissipating for months, as the debate over net neutrality — in short, the question of whether Internet providers should be allowed to charge content providers for speedier service — played out in Washington.”
“The government’s verdict on the merger and its stance on net neutrality were separate issues, but they were very much intertwined,” the newspaper wrote. “At the end of the day, the government’s commitment to maintaining a free and open Internet did not square with the prospect of a single company controlling as much as 40 percent of the public’s access to it.”
NPR’s Noguchi, in her Morning Edition story, noted that today’s decision comes amid a backdrop of changes in the cable industry, including the announcement by Verizon that it will offer consumers slimmed-down packages of channels. And she reported that more networks — including companies such as HBO and Showtime — are offering streaming of online video that does not require you to buy a cable package.
“Consumers and consumer advocates have long been asking for this kind of a la carte service,” she said. “A lot of people don’t want to pay for hundreds of channels they never watch. And now that that’s starting to happen in the industry, and that’s why you saw Verizon make that move.
“Consumer advocates lobbying against this deal said they were concerned creating a big cable behemoth would slow that trend.”