FCC approves merger of cable giants
By David Ho
Associated Press
WASHINGTON — The $29.2 billion merger of Comcast and AT&T Broadband was approved by federal regulators yesterday, clearing the way for creation of the nation's largest cable television company.
Associated Press
The Federal Communications Commission's decision is contingent on AT&T and Comcast selling their combined 25 percent ownership of Time Warner Entertainment.
When Comcast merges with AT&T Broadband, it will boast 22.3 million customers and control 29 percent of the national cable market.
The FCC voted 3-1 for the deal over the objections of a coalition of consumer groups, which claims the new cable giant would limit customers' choices in television viewing and Internet access.
But FCC Chairman Michael Powell said "the benefits of this transaction are considerable, the potential harms negligible."
Commissioner Michael Copps, the panel's only Democrat, voted against the deal.
"The sheer economic power created by this mega-combination and the opportunities for abuse that would accompany it outweigh the very limited public interest benefits," he said.
Following the FCC announcement, the Justice Department's antitrust division added that it also wouldn't challenge the merger.
Comcast, the nation's third-largest cable operator with about 8.5 million subscribers, would acquire AT&T Broadband, the largest cable operator, to form a new AT&T Comcast with 22.3 million subscribers.
The new company would control 29 percent of the market and have nearly twice as many customers as the No. 2 cable company, AOL Time Warner Inc.
FCC approval was the final hurdle for the companies, which proposed the merger in December.
The deal, originally valued at $47 billion in stock, plus assumption of about $25 billion in debt, has declined in value by about 35 percent as Comcast's shares have fallen along with the rest of the market over the past year.
The companies announced last month that as operations are merged, 1,700 jobs identified as redundant will be cut at AT&T Broadband's headquarters in Englewood, Colo.
AT&T Broadband has about 40,000 employees and Comcast Corp.'s cable division has about 20,000.
Consumer groups said in their motion to the FCC that creation of such a large cable company would reduce competition, resulting in higher rates, less diverse programming and fewer choices of high-speed Internet service providers available via cable.
Comcast and AT&T Broadband said they "have repeatedly stated on the record that they have not and will not restrict their subscribers from accessing any content available on the Internet."
Shares of Comcast fell 70 cents, or 3 percent, to close at $23.30 on the Nasdaq Stock Market. Shares of AT&T fell 39 cents to $13.47 on the New York Stock Exchange.
