Comcast has apparently abandoned its $45 billion plan to buy Time Warner Cable in the face of resistance from federal regulators.
It's a stunning defeat for a company with close ties to the Obama administration and that had already succeeded in winning government approval for another controversial deal, its 2011 purchase of NBCUniversal.
Reports that Justice Department lawyers were leaning against the merger of the nation's top two cable providers and that Federal Communications Commission officials recommended that the agency designate the deal for a special administrative hearing likely sealed its fate.
"It's pretty much game over for this deal," Robert McDowell, a former FCC commissioner who now works for the law firm Wiley Rein, said even before news leaked that Comcast was giving up. "Barring some miracle, I don't see how they pull a rabbit out of their hat."
In a note to investors Thursday morning, Craig Moffett, an industry analyst for MoffettNathanson, said the deal was "a bit like an elephant that has been dropped out of an airplane."
"At around 10,000 feet, it is technically still alive," he wrote. "But it is falling fast, there's not much you can do to stop it, and its odds of survival are pretty low when it hits the ground."
The FCC and the Justice Department declined to comment.
It would have been even harder for the cable companies to overcome opposition from the FCC than from the Justice Department, which could have filed a lawsuit in federal court and tried to convince a judge to block it. The companies would have been able to defend themselves, and the government would have had the burden to prove the deal violated antitrust laws.
But at the FCC, the burden is with the companies applying for the licenses to merge. If the FCC called for an administrative hearing, it would have essentially sent the deal to a bureaucratic hell with little hope of escape. The companies would have had to spend months making their case to an administrative law judge, and it would have been unlikely that they ever would have gotten approval from a majority of the five-member commission.
Walking away from the deal must have been especially tempting for Comcast because it won't owe Time Warner Cable any money. Despite the massive size of the deal, it doesn't include a break-up fee.
The companies, which launched an all-out lobbying blitz for the deal over the past year, had argued that it would have meant better video technology, faster Internet speeds, and more Internet access for low-income consumers. They also said it wouldn't reduce any competition because the companies don't overlap in any areas.
But consumer advocates and companies, including Netflix and Dish Network, rallied against the deal, warning it would give a single company unprecedented control over television and Internet access. Six Democratic senators, led by Sen. Al Franken of Minnesota, sent a letter this week pressing regulators to block the deal.
Franken said Thursday that the merger's apparent demise is a "huge victory" for consumers. "This transaction would create a telecom behemoth that would lead to higher prices, fewer choices, and even worse service. We need more competition in this space, not less," he said in a statement.
"Comcast's withdrawal of its proposed merger with Time Warner Cable would be spectacularly good news for consumers concerned about the spiraling costs of cable and broadband and for millions of citizens who want nothing more to do with gatekeeping and consolidation in the communications ecosystem on which our democracy depends," Michael Copps, a former Democratic FCC commissioner now with the liberal advocacy group Common Cause, said.
Attention already is beginning to turn to whether Charter or another cable provider may try to buy Time Warner. A smaller company may have a better chance at getting regulatory approval than Comcast, the nation's largest cable provider.
—This article has been updated.