Comcast-TWC merger faces California scrutiny, Bright House deal complications

As top Comcast (NASDAQ: CMCSA) executives visited the FCC to continue lobbying for their proposed $45 billion acquisition of Time Warner Cable (NYSE: TWC), elements complicating the deal continued to emerge.

For one, the takeover is facing growing opposition outside the Beltway on the state level, with California's public utility commission contributing a memo to the Federal Communications Commission's review process. Here's an excerpt:

"Comcast and TWC, through their California subsidiaries, would potentially combine the two largest providers of high-speed last-mile broadband service in the state. The merger would impact competition and consumer welfare in California's market for wholesale telecommunications, retail voice, backhaul and broadband services.

"More importantly, the merger would have an impact on broadband deployment in California as two of the largest cable broadband services in the state form one entity."

News that California is joining New York among states independently scrutinizing the Comcast/TWC merger comes amid word that there's continuing consternation among regulators as to how to approach a longstanding deal between TWC and Bright House.

As the Wall Street Journal reports, Bright House has contracted with the larger TWC to handle programming rights and technology acquisition negotiations for several decades.

Bright House, the No. 6 cable operator in the U.S. with 2.1 million video subscriptions spread from California to Florida, has paid a fee for nearly two decades to exploit TWC's greater scale.

As the Journal reports, the FCC faces a decision in reviewing the merger: let the combined Comcast/TWC enjoy even more consolidated market power by keeping the Bright House deal intact; or harm the leverage of a smaller operator by dissolving the deal.

For more:
- read this Wall Street Journal story (sub. req.)
- read this Latin Post story

Related links:
Comcast, TWC back off funding dinner for FCC's Clyburn
FCC starts 180-day clock on Comcast-TWC merger review
Comcast's Cohen pleads merger case to FCC officials