FCC Signals Death Knell For Comcast-TWC Merger With 'Hearing Designation Order'

If Comcast and Time Warner Cable have a Plan B, they may want to consider implementing it. Just as was expected would happen, the Federal Communication Commission's staff reportedly recommended what's called a "hearing designation order" to determine if the proposed $42.5 billion Comcast-TWC merger is within the best interest of consumers.

A hearing designation order is an undesirable procedural move in which an administrative law judge would ultimately decide on the fate of the proposed merger. And while the FCC hasn't come right out and said it opposed the deal, this can be viewed as a strong sign that it's not on board with the idea of these two cable titans teaming up. This is the same move that prompted AT&T and T-Mobile to drop their plans for a $39 billion merger back in 2011.

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According to The Wall Street Journal, regulatory experts typically view this kind of scenario as a deal killer. However, Comcast and TWC will both still have an opportunity to plead their case and perhaps avoid a hearing. But should the hearing designation order proceed, it could end up being a lengthy ordeal. Furthermore, Comcast would be able to weigh in on the matter and tell the judge why he or she should approve the merger.

Part of Comcast's argument would undoubtedly center around the promise of better video and broadband experiences for TWC customers if the deal was approved. Comcast would also argue that it'd be able to expand low income broadband options after the merger, both of which are arguments it's made in the past.

On the flip side, regulators are concerned that the merger would give Comcast control of about 30 percent of the pay TV market and a staggering 57 percent of the broadband Internet market. A band of U.S. Senators also weighed in on the matter, expressing concern that the merger, if approved, would ultimately lead to higher prices, fewer choices, and poorer quality services.