Report: Comcast-Time Warner deal faces Setback

Late Wednesday, the Wall Street Journal reported that the proposed merger between Comcast (CMCSA) and Time Warner Cable (TWC) has faced a major setback. This is because Federal Communications Commission staff has recommended that the $45.2 billion deal should be sent to an administrative hearing.

According to people familiar with the situation, the FCC staff has proposed to issue a 'hearing designation order' that will put the cable companies' merger in the hands of an administrative judge.

The hearing would most probably be a protracted process, which as per the regulatory experts could effectively kill the deal.

Bloomberg News reported that according to a person with knowledge of the situation, FCC officials have leaned towards concluding that the merger will not be helpful for the consumers.

According to Bloomberg, on Wednesday, Comcast executives met with the FCC and Justice Department officials in separate meetings. They came out with the impression that the deal was in trouble.

The companies have to take the government in confidence, that the combined company won't hold too much control over the marketplace.

About 40% of the US market for broadband Internet will be under the control of the combined company. FCC has issued a new definition of broadband under which the market share could be higher.

Previously, Comcast has stated that the merger would yield 'significant consumer benefits' without 'any reduction of competition'. But others disagree.

Matt Wood, policy director for Free Press, said, "If the news from the FCC is true, it would mean that Internet users can breathe a sigh of relief. Designating the deal for a hearing would make Comcast and Time Warner Cable go through a lengthy evidentiary procedure". Free Press is an awareness group that is against the deal.