The issue might not be whether the deal is approved -- but rather, under what conditions.
Comcast's proposed $45.2 billion acquisition of Time Warner Cable figures to be a hot topic in the nation's capital for months to come.
With Tom Wheeler barely comfortable in his new seat as chairman of the Federal Communications Commission, Comcast will be seeking to have authorities bless a deal that will give the enlarged company about 30 percent of the pay TV market in the country. Although Comcast and TWC don't share too many markets -- and the company has promised divest some areas of overlap -- the prospect of a new market power bargaining with TV broadcasters and setting the terms of the nation's advance into digital networks is one that has already frightened some public advocacy groups.
"Comcast cannot be allowed to purchase Time Warner Cable," says John Bergmayer, a senior staff attorney at Public Knowledge. "Antitrust authorities and the FCC must stop it. If Comcast takes over Time Warner Cable, it would wield unprecedented gatekeeper power in several important markets."
Others like Ajit Pai, a Republican commissioner at the FCC, have already predicted that the Obama administration wouldn't approve a Comcast-TWC marriage.
Comcast chairman and CEO Brian Roberts told Wall Street analysts this morning that the deal is "approvable," arguing "it is pro-consumer, pro-competitive and strongly in the public interest." A core part of his argument is that the merger will mean faster roll-out of better technology across the nation.
Before he stepped up to become FCC chairman, Wheeler was one of the cable industry's most fiercest lobbyists and in writings, expressed an inclination to accept big mergers. For example, he criticized the Justice Department when it sued to block AT&T's acquisition of T-Mobile USA. "The long-term impact of the Justice Department's decision would appear to be the growing irrelevance of traditional telecommunications regulatory concepts on mobile broadband providers," wrote Wheeler at the time.
The media regulatory chief has been a proponent of placing conditions on mergers, and here, there would seemingly be precedent as Comcast accepted many when buying NBCUniversal three years ago. At the time, the company agreed to enhance the diversity of its programming, to treat non-affiliated programmers equally and to step back from some decision-making when it came to Hulu.
Already, there's some talk about extending Comcast's commitment towards net neutrality -- a subject that gathered heat with a federal appeals court's decision in January to strike down many of the FCC's Open Internet rules including anti-discrimination and anti-blocking measures. Comcast has already forged its own deal with the FCC, and it could only be a matter of time before that agreement is extended to cover TWC customers. The larger question will be whether the FCC or Justice Department seeks even greater conditions such as requiring Comcast to offer access to its video programming holdings to other cable distributors or to companies like Verizon, which recently acquired Intel's "virtual" pay TV service.
Comcast's proposed acquisition of TWC will surely be an invitation to open up a negotiation as much as anything. As Bruce Gottlieb, former chief counsel at the FCC, once said, "Conditions reached as a bitter compromise in one merger often become the floor for the those imposed on the very next merger."
With subjects like retransmission fights, blackouts and media consolidation still fresh in the minds of legislators, the proposed deal could instigate oversight hearings nominally about the effect of combining the nation's two largest cable companies, but really about much more.
Comcast is being advised by legal teams at Davis Polk & Wardwell and Willkie Farr & Gallagher while TWC is being advised by a legal team at Skadden, Arps, Slate, Meagher & Flom.
The National Association of Broadcasters has chosen to remain silent for the time being. A spokesperson declined to comment.