When Comcast announced its $45 billion takeover of Time Warner Cable in February 2014, the notion that television viewers would have the freedom to pay for exactly what they wanted to watch and how they wanted to watch it seemed like something that might be possible in the distant future.
That changed quickly in the last six months - much more so than industry executives and observers had expected. Networks like HBO and CBS introduced streaming services that did not require cable subscriptions. Sony, Dish Network and Apple prepared television offerings aimed at people who pay for Internet but not television. Netflix's subscriber base soared to 40.3 million in the United States.
This rapidly shifting landscape loomed large in the minds of regulators, who appeared poised to block the deal on the grounds that Comcast would have too much power over the Internet and declared victory after Comcast and Time Warner confirmed that the merger had been abandoned. The transformation underscores the growing importance of the Internet as the ultimate gateway for information and entertainment and just how quickly the market shifted underneath Comcast. The company pitched the Time Warner Cable deal as a merger between two cable companies that -while the first and second largest in the country - did not compete for customers in any local markets and would have an unprecedented national platform to create new video and broadband services.
The announcement that the deal was off came two days after meetings between Comcast and federal regulators, who had signaled that they were leaning toward blocking the merger. It also came after Attorney General Eric H Holder Jr told Justice Department lawyers two weeks ago that they had his support to challenge the transaction, according to a senior Justice Department official who spoke on the condition of anonymity.
The Justice Department confirmed that it had significant concerns that the proposed merger "would make Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers." "This is a victory not only for the Department of Justice," Holder said in a statement, "but also for providers of content and streaming services who work to bring innovative products to consumers across America and around the world." That sentiment was echoed by Tom Wheeler, the chairman of the Federal Communications Commission, in a statement. Federal regulators zeroed in on the fact that the future of the cable business was the Internet and that, if the merger went through, the combined company would control nearly 60 percent of the country's high-speed broadband customers. It would also control just under 30 per cent of pay television service.
The intense regulatory scrutiny did not stop chatter about a new round of consolidation in the industry.
©2015 The New York Times News Service
