WASHINGTON Jan 17 Any expansion by cable
provider Comcast, including a deal with Charter Communications
to split provider Time Warner Cable between them, would get a
tough review from U.S. regulators, who might use the proposal to
force Internet providers to treat all traffic equally, antitrust
Charter Communications Inc reached out to Comcast
Corp this week about teaming up to buy Time Warner
Cable Inc, according to people familiar with the matter.
Comcast is the top U.S. cable provider and video provider,
Time Warner Cable is No. 2 and Charter is the fourth largest.
The Federal Communications Commission and U.S. antitrust
authorities will closely scrutinize any deal between the
companies since it would involve a vast range of content, video,
cable and telephony.
But ultimately the government would be unlikely to try to
stop a deal, said Robert Doyle, an antitrust expert at Doyle,
Barlow and Mazard PLLC, who argued that some antitrust concerns
could probably be remedied by strategic asset sales.
"We don't think this is one that rises to the level of a
challenge," he said, referring to a lawsuit that the Justice
Department could file to stop a deal.
Antitrust experts agreed, however, that any approval -
particularly for Comcast - would almost certainly come with
In particular, the FCC could require the companies to treat
all traffic the same, which means that companies such as Comcast
with lots of content would be deterred from charging customers
more if they watch movies or shows owned by other providers,
such as Netflix Inc.
That is no small matter. Netflix's share price fell
following Tuesday's decision by U.S. Court of Appeals for the
District of Columbia Circuit to reject federal "net neutrality"
rules that required Internet providers to treat all web traffic
Antitrust expert Jacqueline Grise of the law firm Cooley LLP
said there was no guarantee a deal would be approved. The merger
proposal would get a careful look from antitrust regulators, but
the companies might craft a "creative solution" to satisfy the
government, she said.
The net neutrality condition is similar to one that Comcast
was required to agree to in order to win approval for a $30
billion deal to take control of NBC Universal in 2011. Those
conditions expire in 2018.
Or, again echoing a condition in the 2011 deal, regulators
could require Comcast to make content available to online
providers, said Grise.
Harold Feld of the group Public Knowledge, which campaigns
for the preservation of an open Internet, agreed that the 2011
agreement could lead to similar conditions should the Time
Warner transaction go ahead.
"The conditions that they (regulators) would want, if I were
Comcast I'm not sure I would want to take," he said.
Charter, backed by billionaire John Malone's Liberty Media
Corp, formally announced its $132.50 per share bid for
Time Warner Cable on Monday, which the larger rival promptly
rejected as too low.
Bert Foer, president of the American Antitrust Institute,
urged regulators to reject the gobbling up of Time Warner Cable.
"I'm very worried about control over the pipes that allow
the cable company to discriminate against content particularly
in the absence of a net neutrality rule. If the deal goes
through, we're likely to see a spiral of consolidation both at
the pipe end and the content end," he said.
"What's so wrong with having Time Warner (Cable) remaining
an independent company?"