FCC APPROVES COMCAST/AT&T BROADBAND MERGER

Joined Companies Will Have 22.3 Million Cable Subscribers

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WASHINGTON (AdAge.com) -- The Federal Communications Commission today gave final approval to Comcast's $47.5 billion merger with AT&T Broadband, a deal that will give the combined company 22.3 million subscribers, nearly double the number of its competitors.

The merger would "pose no substantial public interest harm," said Ken Ferree, chief of the Media Bureau. "It is easy to react viscerally to the combination of two large companies but this solves problems. It doesn't create problems."

Separately, Comcast is the country's No. 3 cable company, and AT&T is No. 1.

Time Warner deal
One condition of the deal

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requires AT&T Comcast, as the new company will be called, to put its interest in Time Warner Entertainment, a media partnership with AOL Time Warner, into a trust. The company then has 5 1/2 years to then divest itself of the deal. In the meantime, AT&T Comcast is prohibited from any involvement in the content programming of Time Warner Entertainment, which includes cable networks HBO and Comedy Central.

AOL Time Warner this summer agreed to pay AT&T $3.6 billion in cash and stock, plus ownership in cable-television systems, to dissolve the venture and gain control of Time Warner Entertainment.

AOL Time Warner is the No. 2 U.S. cable operator.

The FCC rejected calls from consumer groups asking for restrictions on the merger and for some sort of insurance that the combined company would provide open Internet access. The only Democrat on the four-person commission, Michael J. Copps, dissented from the decision.

'Mega-combination'
"The sheer economic power created by this mega-combination, and the opportunities for abuse that would accompany it, outweigh the very limited public interest benefits that either the applicants or the majority find here," he said in a statement.

Jeff Chester, executive director of the consumer group Center for Digital Democracy, said the merger would give the new company 30% of the cable marketplace and "unprecedented control" of cable and the broadband Internet.

"There should have been safeguards to ensure competition and diversity in the cable programming market; real choices for broadband users; and public policies designed to empower local communities so they can share some of the benefits of digital cable," he said.

The Justice Department issued a statement saying it would not challenge the merger.

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