Last year, Comcast and Time Warner Cable announced plans to merge into one of the largest media companies in the world. However, when it became apparent that both the Justice Department and the Federal Communications Commission were extremely cool toward the deal, the two companies announced they were calling it off.
For all intents and purposes, the deal came unraveled two weeks ago, when Justice Department lawyers told Attorney General Eric Holder that they were leaning toward challenging the deal on antitrust grounds. It’s not hard to see why. The merger would have created a behemoth that would have controlled almost 30 percent of the nation’s cable subscriber base and a whopping 57 percent of broadband traffic. It would have also been the dominant Internet and cable provider in nearly every major market east of the Mississippi–including my hometown of Charlotte–and virtually the entire West Coast from Seattle to the Mexican border.
The sheer size of the merged company was apparently too much for Justice Department lawyers to swallow. According to a Justice Department source with knowledge of the discussions, the lawyers feared that the new Comcast would have far too much control over the nation’s Internet traffic, and would be in a position to keep competitors from getting their content to consumers. In what proved to be one of his last major decisions before handing the department to Loretta Lynch, Holder gave them the go-ahead to oppose the deal. The FCC had indicated it would oppose the deal as well.
On Wednesday, Comcast executives met with officials from the Justice Department and FCC, and were told to expect briefs to be filed against the merger. Less than 24 hours later, word leaked out that Comcast was walking away from the deal. On Friday morning, both companies confirmed that the deal was dead.
Although creating such a colossus would appear to be grossly anti-competitive on its face, it initially appeared that approval would be a formality. Despite the two companies’ large size, there was virtually no overlap between them. However, as The New York Times’ Jonathan Mahler writes, the game changed once the federal government decided to take a stronger stand in favor of net neutrality. In February–one year after Comcast and Time Warner announced their planned merger–the FCC announced new rules that would allow it to regulate Internet service as a public utility. The final rules were published two weeks ago.
Simply put, it would have made no sense to take steps to ensure the Internet remains as open as possible and at the same time hand 57 percent of the nation’s broadband to a single company. Both the Justice Department and the FCC indicated as much. The Justice Department said that had the merger gone through, Comcast would have been “an unavoidable gatekeeper” for anyone relying on broadband to reach customers. FCC chairman Tom Wheeler said that an enlarged Comcast would have “posed an unacceptable risk to competition and innovation” on the Internet. Marvin Ammori, a lawyer who helped lead the fight for net neutrality, put it more succinctly–an enlarged Comcast would have been “pretty much too big to regulate.”
In his now-famous segment on net neutrality, John Oliver said that Comcast had forced Netflix to agree to what amounted to a “mob shakedown” in return for faster service. This deal would have amounted to a mob shakedown on the nation’s cable and Internet subscribers as well. Today may go down as the day that the Internet as we know it was saved.
