Report: FCC Staff Recommends Hearing for Comcast-TWC

Potentially a Major Setback for Merger
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An online report in the Wall Street Journal late Wednesday that claims Federal Communications Commission staff members are recommending the Comcast-Time Warner Cable merger be heard before an administrative law judge has at least one analyst calling the time of death for the $67 billion deal.

According to the Journal report citing people familiar with the matter, FCC staff are recommending that the FCC hold a hearing on the matter, which the paper said would send a clear signal that the agency does not believe the transaction would be in the public interest.

The WSJ report came days after talk that the Department of Justice was looking closely at Comcast’s role in the 2013 decision by online video pioneer Hulu to take itself off the auction block.  As part of the regulatory concessions it made as a result of the purchase of NBC Universal, Comcast, a partner in Hulu, agreed to not have any say or involvement in Hulu corporate matters.

An industry source speaking on background said he had conversations with senior FCC staffers who had suggested the ALJ route was likely, but had not said so explicitly. Other industry sources concurred that was their sense as well. A source inside the FCC confirmed thecommision's deal-vetters had signaled they would recommend adjudication

In a note to clients, BTIG media analyst Richard Greenfield wrote that the FCC recommendation, on top of the threat of a DOJ lawsuit “would appear to be a death sentence for the transaction.”

Comcast was scheduled to meet with DOJ attorneys today (April 22). In a statement the company acknowledged that meeting as well as talks with the FCC, but declined further comment.

 “We had one in a series of meetings with the Department of Justice today, as well as another meeting with the FCC,” Comcast said in a statement. “As with all of our DOJ discussions in the past and going forward, we do not believe it is appropriate to share the content of those meetings publicly, and we, therefore, have no comment.  Similarly, our only comment on FCC meetings will be our filed ex parte communication."

Public policy groups, who have been outspoken opponents of the merger, were cautiously optimistic that the latest devleopment could mean the deal will be scuttled.

"If the news from the FCC is true, it would mean that Internet users can breathe a sigh of relief.," Free Press policy director Matt Wood said in a statement. "Designating the deal for a hearing would make Comcast and Time Warner Cable go through a lengthy evidentiary procedure. That's a very high hurdle to clear in its own right, and a huge barrier to overcome for a disastrous deal like this one, which has no real public interest benefits to show.

"The FCC seems to have heard the nearly one million Americans who have told Washington that the proposed merger helps only the people in the executive suites of Comcast and Time Warner Cable," Wood continued. "These executives failed to see the reality that was plain to all of the deal's many opponents. Giving so much control over our communications system to one company — especially one with a track record of spiraling prices, terrible customer service and blocking Internet content — would be a terrible mistake."

Multichannel News Washington bureau chief John Eggerton also contributed to this story.

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