Collapse of Comcast deal may indicate FCC is ready to flex some muscle

Philadelphia-based Comcast Corp. has officially killed its $45 billion plan to merge with Time Warner Cable — and at least one consumer advocate is cheering.

The announcement came after regulators worried the deal would hand Comcast too much power in the Internet broadband market.

This week the Federal Communications Commission recommended that the proposed merger be sent to an administrative hearing, a process that can be dragged out for months as both sides hash out legal technicalities in front of a judge.

Analysts said the move was a signal that the FCC didn’t have confidence in the deal.  So Comcast soon pulled the plug.

The merger was expected to give Comcast more than half all high-speed Internet customers in the country.

Analyst Harold Feld of the consumer advocacy group Public Knowledge said Comcast has grown enormous from these kinds of acquisitions.

Feld views the scrapping of merger as good for consumers:

“When you have two companies that suck, and you put them together, it’s not like they suck less, they suck more. And in fact, it’s exponential, so it’s suckage squared.”

Opposition to the deal came from many corners, Feld noted, which helped fuel its ultimate demise.

“While it is true that the FCC doesn’t do this as a popularity contest, the fact that there was just this outpouring of frustration and anger with Comcast from almost everybody, whether it was subscribers, or companies that do business with Comcast, was very telling,” Feld said.

What will other media companies eyeing a merger or acquisition learn from this?

Feld thinks this week’s developments are a sign the FCC is taking the public’s interest seriously, which might be a consideration the next time two mega-companies try to combine forces.

“Going forward, for all of these companies that are very big, this is saying, ‘Look, don’t come to us with a simple story,'”he said.  “Comcast and Time Warner said, ‘We’re just a little cable merger, and we don’t directly compete with each other, so what could possibly be the problem?’ And what the FCC said,here is, ‘Please don’t try to kid us. You’re not simple cable companies; you are major broadband providers, and provide all of these service with these little broadboad tentacles.’

Comcast’s chief executive, Brian Roberts, said of the collapsed deal: “Today we move on.”