Growth of streaming video killed Comcast-Time Warner deal
NEW YORK — What killed Comcast Corp.’s $45 billion bid for Time Warner Cable Inc.? Regulators’ desire to protect the Internet video industry that is reshaping TV.
A combination of the No. 1 and No. 2 US cable companies would have put nearly 30 percent of TV and about 55 percent of broadband subscribers under one roof, along with NBCUniversal, giving the resulting behemoth unprecedented power over what Americans watch and download.
Competitors, consumer groups, and politicians have criticized the deal, saying it would lead to higher prices and less choice.
‘‘The proposed merger would have posed an unacceptable risk to competition and innovation, including to the ability of online video providers to reach and serve consumers,’’ Federal Communications Commission chairman Tom Wheeler said in a written statement.
The Justice Department said Comcast dropped its bid because of regulators’ concerns that the Philadelphia-based cable giant would become an ‘‘unavoidable gatekeeper’’ for Internet services.
One of the concerns consumer advocates and competitors had with the Comcast deal was that it could undermine the streaming video industry that is reshaping TV. Comcast could, for example, require onerous payments from new online-only video providers for connecting to its network.
Dish, the satellite TV company behind the new Web video service Sling TV, and Netflix opposed the deal.
‘‘It goes to show you how important broadband is,’’ said Amy Yong, a Macquarie analyst.
Industry analysts said the breakdown of this deal is further evidence of increased government scrutiny of Internet service providers. ‘‘It is quite evident that regulators will be far more involved in the ISP business than ever before,’’ wrote BTIG analyst Rich Greenfield in a blog post. That could hurt companies’ stock prices.
But that could help customers: ‘‘Increased regulatory scrutiny could prompt cable companies to raise broadband prices less aggressively in the future for fear of drawing even more attention,’’ said Andy Hargreaves of Pacific Crest Securities in a note.
Regulators already have taken other steps that signal how important they consider Internet access. The FCC in February released new ‘Net neutrality’ rules meant to keep broadband providers from charging Internet companies for ‘‘fast lane’’ access or favoring some content. The broadband industry has sued to stop the rules.
‘‘We have to live with it, and respect that, and move on,’’ Comcast chairman Brian Roberts said in an interview on CNBC, referring to the government’s opposition to the merger. ‘‘We always structured this deal in a way that would enable us to walk away.’’
Comcast doesn’t owe Time Warner Cable a breakup fee because the deal didn’t work out.
Still, cable companies are likely to keep combining as video customers decrease and costs rise for the shows, sports and movies they pipe to subscribers.
Many analysts believe that Charter Communications Inc. could resurrect its own effort to acquire Time Warner Cable.
A combined Charter and Time Warner Cable would have 15 million video customers and 16.5 million Internet customers. That arrangement would be smaller than Comcast alone, which has 22.4 million video subscribers and 22 million Internet customers.
Meanwhile, the $48.5 billion combination of DirecTV and AT&T is still expected to go through.