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Comcast plans to acquire Time Warner Cable for $44 billion; FCC and DOJ should veto deal

Media and telecommunications conglomerate Comcast, the nation’s largest provider of cable television and the owner of NBC Universal, has just announced it has agreed to acquire the nation’s second largest cable television provider, Time Warner Cable, in a $44 billion plus all-stock megadeal. Bloomberg reports:

Comcast is paying about $159 a share in the transaction, which will be announced this morning, said the people, who asked not to be named because the negotiations were private.

Comcast beat rival Charter Communications Inc. (CHTR) to what is the second-largest cable-television acquisition by equity value, according to data compiled by Bloomberg. Stamford, Connecticut-based Charter, the fourth-largest U.S. cable company, had offered about $132.50 a share to Time Warner Cable’s management, a bid that was rejected.

If the deal goes through, Comcast would utterly dominate the cable television market as a near monopoly, with nearly three quarters of paying customers. That’s according to the National Cable Television Association.

But the deal should not go through. It is an attempt by Comcast to become ever larger and more powerful… and Comcast is already too large and too powerful. As Rupert Murdoch’s The Wall Street Journal has noted:

The deal faces high regulatory barriers. Comcast not only serves more pay TV customers than any other company in the U.S., nearly 22 million video subscribers, but it also owns entertainment company NBCUniversal, parent of the NBC broadcast network and several big cable channels as well as Universal film studio.

Time Warner Cable serves about 11 million video subscribers, although as part of the deal, Comcast has agreed to divest three million subscribers, the people said. Those divestitures will keep its ownership of the pay TV market below 30%, the people said.

Comcast hopes to convince regulators that because cable companies don’t compete, their deal should go through.

The Federal Communications Commission and the Department of Justice should put a stop to this deal, just as they successfully opposed AT&T’s anticompetitive plan to acquire T-Mobile. Regulators must not forget that Comcast is much more than a cable company. It is a phone, television, Internet, and media company with vast holdings and a venture capital arm with investments in dozens of other companies, as you can see from Columbia Journalism Review’s Who Owns What.

Our friend Craig Aaron, who serves as President of Free Press, succinctly explained why this tie-up should not be allowed in a statement released a little bit ago:

In an already uncompetitive market with high prices that keep going up and up, a merger of the two biggest cable companies should be unthinkable. This deal would be a disaster for consumers and must be stopped.

This deal 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 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.

No one woke up this morning wishing their cable company was bigger or had more control over what they could watch or download. But that — along with higher bills — is  the reality they’ll face tomorrow unless the Department of Justice and the FCC do their jobs and block this merger. Stopping this kind of deal is exactly why we have antitrust laws.

Americans already hate dealing with the cable guy — and both these giant companies regularly rank among the worst of the worst in consumer surveys. But this deal would be the cable guy on steroids — pumped up, unstoppable and grasping for your wallet.

We agree. The FCC and DOJ must put a stop to Comcast CEO Brian Roberts’ empire building. They have allowed Roberts to continue enlarging Comcast through acquisitions for too many years. It’s time they objected and said no more.