ADELPHIA SALE APPROVED BY FTC

Time Warner, Comcast Gain Strength in Local Markets

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WASHINGTON (AdAge.com) -- The joint buyout of Adelphia by cable giants Comcast and Time Warner Cable was approved yesterday by the Federal Trade Commission, giving the two companies the go-ahead to begin consolidating their operations in key markets.
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The deal, worth an estimated $17.6 billion, was hatched last April and involves both acquisitions and swaps. Comcast stands to gain 1.8 million subscribers, ending up with 23.3 million, and Time Warner will likely add 3.5 million for a total of 14.4 million. But the locations of the new subscribers are as important as the increased numbers for both companies and their marketer clients.

Time Warner, for example, has adopted the tack of concentrating its customers in larger markets. The Adelphia deal bolsters its strength in Los Angeles, Ohio and upstate New York. Comcast will strengthen its coverage in growing areas such as Florida and Washington, D.C.

Democratic concerns
The FTC approval came despite concerns by two Democratic commissioners that the deal could give Time Warner and Comcast too much power, especially in local sports programming.

"Serious concerns remain that this transaction may raise the cost of sports programming and harm consumers," wrote FTC commissioners Jon Leibowitz and Pamela Jones Harbour, noting that it puts the companies in the position of controlling regional sports networks including local basketball, hockey and baseball games.

They said the two companies could have the means to freeze out satellite competitors from getting access to sports programming or, alternatively, to exact artificially high fees to air regional sports channels.

Mr. Leibowitz and Ms. Harbour said that while they supported the overall deal, they felt the FTC should have imposed some conditions on the two companies’ sale of local sports programming.

Separately, Time Warner today reported 2005 earnings; its cable division grew revenue 12%, representing a 12% increase in subscription revenue and a 4% climb in ad revenue.

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