Comcast walks away from $45bn TWC deal

Comcast officially dropped its $45bn bid for Time Warner Cable on Friday after failing to convince regulators that a deal that would have transformed the US media and internet landscape was in the public interest.

"Today, we move on," said Brian Roberts, Comcast chairman and chief executive, in a statement. "Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn't agree, we could walk away."

The end to the 14-month quest to combine America's two largest US cable and internet providers came after the US communications watchdog recommended a procedural hearing that looked likely to kill the combination.

TWC was scrambling to salvage the deal as late as Thursday, according to a person familiar with the situation, and had made last-minute overtures to Comcast in a bid to bring it back to the negotiating table.

The failed effort to create a content and distribution powerhouse is the second largest media deal to have collapsed since 1999, according to S&P Capital IQ, displacing Comcast's failed 2004 bid for Walt Disney.

The proposed deal sparked several other transactions, including AT&T'sagreed $48.5bn purchase of DirecTV, which is thought to have a better chance of regulatory approval.

The Comcast-TWC tie-up drew immediate regulatory attention and a storm of protest when it was announced in February 2014, with open internet advocates and companies such as Discovery Communications and Netflix lining up to oppose it.

Its fate seems to have been sealed on Tuesday when antitrust staff at the Federal Communications Commission recommended that the deal be referred to an administrative judge.

People familiar with the matter said the referral torpedoed the transaction, pointing to the fact that only two deals have survived such administrative hearings in the last three decades.

Robert McDowell, a former Republican FCC commissioner said one factor counting against Comcast was its apparent failure to meet all the merger conditions set in 2011 for its acquisition of NBCUniversal.

The FCC antitrust staff analysing the transaction on Wednesday briefed FCC commissioners and then Comcast officials. "In their estimation this merger would do more harm to consumers and not have many benefits," said one person who was briefed.

The deal's failure is likely to have wider repercussions.

Charter Communications, backed by John Malone, had agreed to buy 3.9m subscribers from Comcast and TWC, and had bid $10.4bn for Bright House Networks.

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Analysts expect Comcast to turn its attentions elsewhere following the FCC's recommendation. Potential targets could include a content company, such as Time Warner, Lionsgate or Netflix, or a wireless provider such as T-Mobile US. Another option would be to look overseas, with Liberty Global and Vodafone among the possible targets mentioned by analysts on Thursday.

Comcast, which also owns NBCUniversal, has also been linked with a bid for ITV, the free to air UK commercial broadcaster.

Comcast shares closed up 1.1 per cent while shares in TWC were down 0.6 per cent. There was no termination fee in the transaction, which means neither company will incur a financial penalty from its collapse.

Reporting by Matthew Garrahan, Shannon Bond and James Fontanella-Khan in New York and Barney Jopson in Washington

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