Comcast, Time Warner Cable Merger Is Dead

(RTTNews) - Cable television operator Comcast Corp. (CMCSA, CMCSK) announced Friday that its merger with Time Warner Cable, Inc. (TWC) and its deal with smaller rival Charter Communications, Inc. (CHTR) have been terminated.

"Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn't agree, we could walk away. Comcast NBCUniversal is a unique company with strong momentum," Comcast Chairman and CEO Brian Roberts said in a statement.

Separately, Time Warner Cable said the decision to terminate the merger was mutual.

Time Warner Cable Chairman and CEO Robert Marcus said, "We have always believed that Time Warner Cable is a one-of-a-kind asset. We are strong and getting stronger. Throughout this process, we've been laser focused on executing our operating plan and investing in our plant, products and people to deliver great experiences to our customers."

Comcast agreed in mid-February 2014 to acquire Time Warner Cable in a $45.2 billion all-stock friendly merger deal. Time Warner Cable was to merge with and into a 100 percent owned subsidiary of Comcast.

The deal was originally expected to close in early 2015. Shareholders of both companies had in October overwhelmingly approved the merger.

Meanwhile, Comcast also struck a deal with Charter to divest 4 million managed subscribers in order to reduce competitive concerns over the merger. Comcast was also ready to divest some more of its assets to gain antitrust approval for the deal.

However, as expected, regulators dug into them and kept delaying the anti-trust reviews amid intense pressure and insurmountable scrutiny, particularly the Federal Communications Commission or FCC, the antitrust watchdog.

The FCC and the DoJ are against the merger proposal, citing harm to consumer interest and competition. Others against the deal include companies such as Netflix Inc. (NFLX), Discovery Communications Inc. (DISCA, DISCK) and Dish Network Corp. (DISH).

Earlier in the week, reports stated that the U.S. Department of Justice's antitrust division is nearing a recommendation to block the deal. Staff attorneys at the antitrust division were leaning against the merger of the two largest cable TV operators in the U.S., as they are concerned that consumers would be harmed if the deal closes.

"Throughout this entire process, our employees have kept their eye on the ball and we have had fantastic operating results. I want to thank them and the employees of Time Warner Cable for their tireless efforts. I couldn't be more proud of this company and I am truly excited for what's next," Roberts added.

A combined Comcast-Time Warner Cable entity would have controlled an estimated 35 percent of broadband Internet service coverage and just under 30 percent of the country's pay television subscribers.

The approval for the deal was seen to be much more than just the FCC and DoJ approval, with some of the larger states such as California and New York pulling in their weight. Both these states have powerful public utility commissions and they were likely to flex their regulatory muscle.

U.S. President Barack Obama's call for the FCC to issue rules to protect net neutrality in mid-November had complicated the issue.

In Friday's regular trading session, CMCSA is currently trading at $49.10, down $0.07 or 0.14% on a volume of 15.14 million shares, TWC is trading at $135.33, down $0.29 or 0.21% on a volume of 2.28 million shares, and CHTR is trading at $117.83, down $0.28 or 0.24% on a volume of 1.73 million shares.