FCC takes three-month pause to consider massive telecoms mergers

Comcast, Time Warner, AT&T and DirecTV will just have to wait

stopwatch

The US Federal Communications Commission (FCC) has announced it's pausing before making a decision over the proposed merger of Comcast and Time Warner Cable (TWC) and AT&T's gobbling of DirecTV, citing legal issues.

The agency planned to announce the results of its three-month review of both mergers at the end of March, but has stopped the clock for the moment because of an ongoing court case. The firms involved in the mergers don't want to release records of video-programming contracts with suppliers and have gone to court to make their case that the FCC can't publish the contracts.

"At this time, we believe it is prudent to pause the informal 180-day transaction clocks because the Commission would be advantaged by knowing the resolution of the pending Petition for Review before the transaction clocks reach the 180-day mark," the agency said in a statement.

"In reaching this conclusion, the Commission reserves the right to restart the clock as it believes will best serve the public interest and it intends to provide further guidance as it becomes appropriate."

The pause will also allow all parties, both pro and anti the merger, more breathing space to make their case. While the US$48.5bn AT&T and DirecTV merger has concerned some, as it involves an ISP buying into a new sector of satellite broadcasting, it has been the proposed Comcast/TWC merger that has caused the bigger ruckus.

Last February the two announced a $45bn deal to merge their networks into the biggest cable company and broadband provider in the US. This, along with Comcast's ownership of its own studio of NBC Universal, would provide excellent economies of scale and not harm competition, since the two online compete in a small number of markets.

The two companies agreed to dump off 3.9 million customers as part of the deal, leaving it with just 30 per cent of the US cable market. But that hasn't stopped some pointing out that such a deal would reduce competition in a market that already has too little.

Netflix has protested long and loud about the merger as it's afraid of getting squeezed out of market if Comcast gets too powerful. The mayors of the two largest cities in America, New York and Los Angeles, have also protested about plans to allow the deal.

It doesn't help matters that the two companies are so massively unpopular. TWC is usually ranked near the bottom of customer satisfaction surveys, right next to Comcast. The latter firm hasn't helped itself by a series of high-profile snafus, such as staff who won't take no for an answer or who called a customer "asshole" on his bill.

As a result the FCC has been scrutinizing the proposed deal carefully and with additional time allocated, something that has caused some friction with the companies involved. This latest delay isn't going to improve relations any, but the FCC is determined to look at all angles in the case before giving it the nod. ®

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