Comcast to buy Time Warner in $45.2B deal, setting up antitrust fight

Comcast is buying Time Warner Cable in a $45.2 billion deal that would combine the nation’s biggest cable companies, setting up a lengthy and contentious antitrust review in Washington.

The two companies said the deal would benefit consumers and increase competition, but critics immediately warned it would set up Comcast— which also owns NBC Universal — as too dominant a force in communications.

{mosads}The deal would bring Comcast’s total number of subscribers to 30 million, with the company gaining 8 million subscribers from Time Warner. But as a part of the deal, Comcast also agreed to sell off systems that serve 3 million subscribers.

Top antitrust lawmakers vowed to examine the acquisition closely.

In a statement, Sens. Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah) — chairwoman and ranking member of the Senate Commerce’s Subcommittee on Antitrust — said they will hold a hearing on the proposed merger.

“This proposed merger could have a significant impact on the cable industry and affect consumers across the country,” Klobuchar said, adding that she will “carefully scrutinize the details of this merger and its potential consequences for both consumers and competition.”

Comcast CEO Brian Roberts and other executives during a conference call on Thursday voiced optimism the merger would survive scrutiny from the Federal Communications Commission and Department of Justice.

Roberts said there’s nothing different between the merger and “lots of cable transactions” that have been approved by regulators.

As those agencies consider the deal, “we’ll be as cooperative and expeditious as we can be,” he said.

Public interest groups, however, quickly blasted the deal, arguing the FCC should block it to prevent Comcast from being able to dictate terms to an array of industries, from Hollywood to Internet companies and other communications networks.

“Comcast cannot be allowed to purchase Time Warner Cable. Antitrust authorities and the FCC must stop it,” John Bergmayer, senior staff attorney at Public Knowledge, said in a statement.

Free Press CEO Craig Aaron said the acquisition “would be a disaster for consumers and must be stopped,” as it “would give Comcast control of more than a third of the U.S. pay-TV market and more than half of the U.S. triple-play market for video, voice and Internet service.”

Comcast said the deal would not leave it with 30 percent of the pay-television market, and also argued it would not reduce competition in the cable Internet market.

“We have no business overlap, there’s no reduction in competition,” Roberts said of the two companies.

He also said the acquisition “will drive us to have faster innovation in a highly competitive and dynamically changing market.”

Time Warner Cable CEO Robert Marcus said the deal would make the cable company more able to compete against its non-cable competitors, like national phone companies AT&T and Verizon.

“This combination actually has the potential to increase competition in the broadband space … to be able to compete against other national competitors,” he said.

“We’re not removing a competitor for any consumer. We’re not removing a choice from any consumer.”

During last month’s FCC open meeting, Chairman Tom Wheeler declined to comment on specific hypothetical mergers between cable companies but said his agency will “work closely” with the Justice Department and “will look at the facts that are presented” when a deal comes up.

Roberts said the commitments Comcast made to net neutrality as part of the 2011 deal to buy NBC Universal would extend to Time Warner.

As part of the NBC purchase, Comcast said it would not do anything to disadvantage competitors, such as Netflix, that rely on Comcast’s broadband Internet services to deliver their programs to people’s computers and televisions.

The FCC’s net neutrality rules were struck down by a federal court earlier this year, but Roberts said the commitments Comcast made “will apply day one.”

Roberts also touted a “critical” Comcast program that offers low cost Internet plans with the goal of increasing Internet adoption throughout the country, a goal it shares with the FCC.

“We’re looking forward to bringing that to all the Time Warner markets,” he said.

Bergmayer, however, said the administration should ignore the consequences of the deal that would make progress on the FCC’s goals of net neutrality and broadband adoption. He charged that was an attempt by Comcast “to try to sugar coat [the deal] with a grab bag of conditions.”

— This story was posted at 9:25 a.m. and was updated at 12:09 p.m.