After trying for months to get U.S. Congress to support its merger with Time Warner Cable, people who have inside access to the deal have revealed that the cable provider Comcast has pulled out of its merger deal and doesn't plan on continuing to pursue it.
"The decision marks a swift unraveling of a deal that awaited federal approval for more than a year. Opposition from the U.S. Justice Department and Federal Communications Commission took shape over the past week, leaving officials of the two companies to conclude the deal wouldn't pass muster," reports Bloomberg Businessweek.
If the reports are accurate, Comcast's board will meet to finalize the decision on Thursday, and Comcast will announce the pull-out on Friday. Time Warner will alert its investors during its next investor's conference call, which will occur next Friday, as well as tell them how Time Warner plans to continue operating as an independent ISP.
Comcast's inability to acquire Time Warner will have a significant impact on their future economic plans. "Comcast must regroup to focus on adding more Internet subscribers and defending its pay-TV business, while Time Warner Cable could pursue other possible merger partners, such John Malone's Charter Communications Inc.," notes Bloomberg Businessweek. Meanwhile, companies like Amazon and Netflix will receive a lot of benefits. This means that Comcast will have far less influence on content hosts and creators, which will provide them wilth more flexibility than there would have been under the merger.
According to these sources, the killer for the deal turned out to be an upcoming FCC hearing. "An FCC hearing can take months to complete and drag out the approval process beyond the companies' time frame for completion," Bloomberg reports, adding that "Justice Department staff was leaning against the deal. Senators including Al Franken, a Democrat from Minnesota, also voiced opposition."
