Comcast reportedly intends to walk away from its $45 billion deal to acquire Time Warner Cable.
The news, which broke Thursday afternoon, comes shortly after reports surfaced that staff at the Department of Justice and Federal Communications Commission oppose the deal, which would vastly increase Comcast's broadband footprint. Justice Department staff reportedly were poised to recommend that the agency file suit to block the acquisition, while staff at the FCC reportedly wanted to force Comcast to defend the merger to an administrative law judge.
Comcast declined to comment on reports that it will abandon the deal.
When Comcast announced the Time Warner merger, it said the deal didn't raise antitrust concerns, given that the companies don't offer cable service in the same areas of the country.
But many critics argued that the deal would give Comcast too much power over how people accessed the Internet. A merger between Comcast and Time Warner would leave the combined company in control of 57% of country's Internet connections at speeds of at least 25 Mbps -- the FCC's new definition of broadband.
(Comcast said the deal would only leave it with 30 million of the 87 million U.S. broadband subscriptions, based on a report by the Leichtman Research Group. That organization examined broadband subscribers in the U.S. at the end of last year, before the FCC revised the definition upward.)
Critics said they were afraid that Comcast could use its power over Internet access to harm companies offering online video, like Netflix and Amazon. Those services, which give cord-cutters new entertainment options, potentially threaten Comcast's cable video revenue.
Merger opponents warned that even the FCC's net neutrality rules -- which prohibit broadband providers from blocking or degrading online services -- wouldn't necessarily prevent Comcast from imposing the kinds of data caps that would discourage online video consumption.
Earlier on Thursday, Public Knowledge Senior Vice President Harold Feld blogged that regulators at the DOJ and FCC have “long signaled their concern that online video seems stalled in place since they approved the Comcast/NBCU Deal in 2011.”
He added that new offerings, like HBO Now and CBS direct streaming, have only occurred after Comcast sought permission to acquire Time Warner. “Absent the current scrutiny, Comcast would remain free to continue crushing the emergence of disruptive online rivals as it has done since it bought NBC Universal.”
For instance, Feld says, Comcast reportedly convinced Hulu partners Fox and Disney not to sell the online video company. Comcast also had a highly publicized falling out with Netflix centered on the poor quality of its streams. The dispute between the companies was only resolved when Netflix agreed to pay Comcast a fee to connect directly to its servers.
Although Comcast hasn't officially confirmed its plans, critics of the merger, like former FCC Commissioner Michael Copps, seemed optimistic late Thursday afternoon.
“Comcast's withdrawal of its proposed merger with Time Warner Cable would be spectacularly good news for consumers concerned about the spiraling costs of cable and broadband,” Copps said in a statement.