The Wall St Journal reports that representatives of Comcast Corp and Time Warner Cable Inc are preparing to meet U.S. Department of Justice officials to ‘discuss’ competition concerns the agency has regarding their planned $45 billion merger.
What this really means is that in order for the deal to go through there will need to be significant concessions which could render the deal uninteresting to either of the parties. The DOJ is concerned about specific markets where little competition exists already, usually in places where the option is either Time Warner or Comcast and nobody else. The agency has shown in the past it takes these type of issues seriously, even if they are in a relatively small number of markets compared to the overall deal size.
The DOJ may also be worried about the impact the merger has on competition for internet access. As we wrote about earlier this week the cable business is facing tough times. So the DOJ, in light of cable competitors like Netflix, Amazon Prime and Yahoo, may be willing to go a bit easier on this side of the business. The problem is that the Cable business and the internet business are closely tied. The DOJ’s specific concern appears to be that the combined company would have too much power in the Internet broadband market and would have unfair competitive leverage against TV channel owners and businesses offering online video programming.
The companies will meet with both the DOJ and FTC this Wednesday and remain open to potential remedies, according to their spokespeople. It will mark the first time they have had such meetings since the deal was announced over a year ago.
While the companies sound optimistic past experience suggests the DOJ will likely ask for substantial concessions in order to approve the deal.
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