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FCC Approves Comcast-AT&T Merger

BY Admin  November 14, 2002 at 12:00 PM EDT

In a three-to-one vote, the Republican-dominated commission approved the Comcast-AT&T deal, saying the merger would not harm consumer choice and may even lower cable prices.

“The benefits of this transaction are considerable, the potential harms negligible,” FCC Chairman Michael Powell said in a statement.

“We therefore conclude that the merger serves the public interest, convenience, and necessity.”

The FCC ruled that the combined company, which would reach at least 29 percent of the pay-TV market, would accelerate the rollout of high-speed Internet and other broadband services.

Consumer groups had criticized the proposed merger, saying it would allow the giant company to raise customer prices and wield too much control over cable programming and content. Consumer advocates also raised concerns that the new company could limit the number of Internet service providers customers can access.

The FCC, however, said it found no evidence the merger would lead to higher prices since the companies were never major competitors in a single market.

The only dissenting vote came from Michael J. Copps — the FCC’s lone Democrat and a frequent critic of media consolidation. Copps opposed the deal, saying it would give the combined company too much control over programming, consumer prices and distribution.

“That is just too much raw commercial power,” Copps said in his decision.

Shortly after the FCC’s vote, the Justice Department announced it had no antitrust objections to the proposed $47.5 billion merger.

The combined companies, to be called AT&T Comcast, will serve some 27 million cable subscribers and 17 of the nation’s 20 largest cities, the FCC says.

AT&T Broadband, already the nation’s largest cable TV operator, serves about 13.7 million cable customers and provides high-speed Internet access to more than 1.4 million subscribers.

The company’s merger with Comcast, the nation’s third-largest cable provider, will position the new AT&T Comcast well ahead of its closest competitor, Time Warner Cable, which has an estimated 12.9 million cable subscribers.

In addition to their cable systems, AT&T Comcast will own a 21 percent stake in Time Warner Entertainment, owner of the Time Warner Cable system.

As part of its approval, the FCC required AT&T Comcast to put its Time Warner Entertainment stake into a separate trust on the day the merger closes.

The AT&T Comcast deal may close as early as Monday.

Comcast President Brian L. Roberts said the combined company’s top priority will be upgrading AT&T Broadband’s current cable systems. The effort could cost more than $2 billion and take at least two years to complete.

Until last year, getting the FCC to approve a merger of the nation’s first and third-largest cable companies would have been much more difficult. Past FCC rules barred any cable or satellite providers from reaching more than 30 percent of the cable market.

Earlier this year, a federal appeals court in Washington ruled the FCC limit as unconstitutional; the commission has since initiated a massive overhaul of its media ownership limits.

The FCC’s approval of the Comcast-AT&T deal comes nearly one month after the agency blocked a major satellite-TV merger between EchoStar Communications Corp. and Hughes Electronics Corp., the parent of DirecTV.