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FCC, Justice Department Likely To Object To Comcast-Time Warner Cable Merger

Submitted by on February 14, 2014 – 9:34 amOne Comment

The world of cable and internet providing was jarred on Wednesday with the news that Comcast and Time Warner had agreed to a merger, with Comcast buying out its competitor in an all-stock deal. But the union of the first and fourth largest pay-television companies in the nation (the other two are satellite networks) is unlikely to get past the federal government without major objections.

The Justice Department, Federal Trade Commission, and Federal Communications Commission all have jurisdiction over the deal. The Justice Department and FTC will investigate for possible anti-trust violations. But cable companies already operate as local near-monopolies, and the merger will not eliminate much local competition, as Comcast and Time Warner didn’t directly compete much in local markets. Comcast’s strongholds are in its native Philadelphia, and it will pick up more Northeastern markets from Time Warner in New York and other cities. Together, the companies control about 30% of the pay-TV market, still far from a majority.

But more attention is on the FCC, which has broad powers to enforce the “public good.” Comcast has tentatively agreed to extend net neutrality practices to its Time Warner holdings, but critics fear the company could discriminate against various content providers. Also, Comcast owns a controlling interest in NBC Universal, and Time Warner had a well-publicized dispute with CBS last year that resulted in a temporary blackout.

However, mergers between major cable providers are probably unavoidable. With increasing competition from online content providers like Netflix and new technologies like Aereo, legacy industries are consolidating to either provide superior services- or use their pooled resources against upstarts.

What do you think of the merger? Let us know in the Comments.

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