Cable groups to address antitrust concerns over $45bn merger

Comcast and Time Warner Cable will hold a vital meeting with the US Justice Department this week in an attempt to allay the concerns of antitrust officials about a merger of the country's two largest cable providers.

The $45bn deal, announced 14 months ago, would give Comcast-TWC control of about a third of US pay television and broadband markets.

Wednesday's meeting is crucial for the cable operators, which are eager to move forward with their tie-up after waiting more than a year to obtain antitrust approval.

If the deal is blocked or falls apart because the companies cannot agree concessions demanded by regulators, it would also have repercussions across the cable industry. Charter's acquisition of Comcast customers would be in doubt, as would Charter's recently announced $10.4bn agreement to buy Bright House Networks.

Consumer groups, some lawmakers and content providers such as Netflix have come out strongly against the deal, arguing that the companies could raise prices for customers and charge content providers more to reach audiences.

Bloomberg reported on Friday that justice department staff attorneys were nearing a recommendation to block the deal, and Wednesday's meeting, first reported by the Wall Street Journal, could result in the companies being pushed to agree more concessions.

Regulators are also worried about the negotiating power Comcast-TWC could have over television programmers, which obtain payments from cable companies to show their content, according to people familiar with the case.

But cable providers argue that such deals benefit programmers. Last year, TWC was locked in a battle with CBS over how much the cable company should pay to show CBS-owned programming. The disagreement caused a month-long blackout of CBS-owned networks, such as Showtime and the Smithsonian Channel, for certain Time Warner Cable subscribers.

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TWC shares fell 5.4 per cent on Friday and are trading 11 per cent below the value of Comcast's all-share bid, indicating that investors are sceptical that the deal will go ahead.

Comcast and TWC have argued their merger would lead to an improved service and they have also pledged to abide by net neutrality principles that would require them to treat all internet traffic equally.

"The Comcast/Time Warner Cable transaction will result in significant consumer benefits - faster broadband speeds, access to a superior video experience, and more competition in business services resulting in billions of dollars of cost savings," Comcast said in a statement.

"These benefits have been essentially unchallenged in the record - and all can be achieved without any reduction of competition. As a result, there is no basis for a lawsuit to block the transaction."

If the DoJ moves to block the deal, it does not necessarily mean the transaction will die. The agency sued in the American Airlines-US Airways deal, but ended up approving the merger in 2013 after the companies agreed to additional concessions.

Comcast and TWC have already agreed to divest 3.9m customers to Charter, but they may have to give up more customers or agree to other conditions to allay regulators' concerns.

The deal also needs approval from the Federal Communications Commission, which reviews transactions to ensure they are in the public's interest. But the agency's merger review has been put on hold because of lawsuits over whether third parties can view documents related to the deal.

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