By Brent Kendall And Shalini Ramachandran
WASHINGTON--For enforcers at two federal agencies reviewing the
deal, Comcast Corp.'s bid to acquire Time Warner Cable Inc. raised
one overarching concern: the combined firm could use its power over
broadband to impede the expanding marketplace for online video
programming that is upending the traditional cable model.
Justice Department antitrust officials briefed Attorney General
Eric Holder on the merger two weeks ago, outlining their concerns
over the $45.2 billion deal. Mr. Holder authorized them to file a
lawsuit challenging the cable tie-up, a Justice official said
Friday. At the Federal Communications Commission, staffers were in
close contact with FCC Chairman Tom Wheeler as its investigation
progressed, and he reached a firm conclusion well before this week
that the deal wasn't in the public's interest, an FCC official
said.
Mr. Holder's authorization was part of the process for building
a case. The department's antitrust division hadn't made a final
decision on whether to file suit when Comcast walked away from the
transaction after meetings at the Justice Department and the FCC on
Wednesday, the official said.
Comcast's decision to drop the deal "is a victory not only for
the Justice Department, but also for providers of content and
streaming services who work to bring innovative products to
consumers across America and around the world," Mr. Holder said in
a written statement Friday.
The department was planning to engage in further discussions
with the companies, but was nearing the conclusion the cable giants
couldn't have offered concessions that would have fixed competition
problems raise by the deal, the official said.
The companies weren't informed at Wednesday's meeting that Mr.
Holder had given his blessing for a lawsuit.
Over at the FCC, an official said staffers investigating the
deal began to sum up their research in recent weeks and reached two
main conclusions: Comcast's claimed benefits for the deal were
slight, while the potential risks posed by the transaction were
large.
FCC staff this week recommended the commission refer the
transaction for review by an administrative law judge, a move that
would effectively kill the deal. The commission's stance was a
major factor prompting Comcast to drop its pursuit of regulatory
approval.
Officials at both agencies were focused on the fact that a
combined Comcast-Time Warner Cable would have about 57% of the
broadband market. That amount of control over the nation's Internet
pipes would have given the firm the ability to restrain companies
such as Netflix Inc., Amazon.com Inc. and Google Inc. that deliver
programming over broadband, government investigators believed. Both
agencies also believed a bigger Comcast could have made it harder
for TV channel owners to offer video programming directly to
consumers over the Internet.
"If you have close to 60% of the high-speed eyeballs, that's a
pretty big gateway," the Justice Department official said.
Write to Brent Kendall at brent.kendall@wsj.com and Shalini
Ramachandran at shalini.ramachandran@wsj.com
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