TWC Time Warner Cable

By John D. McKinnon and Shalini Ramachandran 

Senate Democratic Leader Harry Reid added his voice Tuesday to the chorus of lawmakers and industry players raising concerns about Charter Communications Inc.'s proposed acquisition of Time Warner Cable Inc.

In a letter to Federal Communications Commission Chairman Tom Wheeler and Attorney General Loretta Lynch, Mr. Reid (D., Nev.) said the deal "has the potential to erect further barriers to broadband competition" and could lead to "reduced consumer choice in online video."

The deal would create the No. 2 cable and broadband industry player that would rival leader Comcast Corp. in overall size. But the FCC has been weighing several concerns surrounding the merger, including whether it could add to competitive barriers for online video providers.

Some potential competitors--including Dish Network Corp. as well as some smaller cable firms--also have voiced opposition to the deal.

Mr. Reid warned the deal would effectively create a national "duopoly" in high-speed broadband, something that "may pose a significant risk to consumers."

He also suggested that imposing restrictive conditions on the merged company might not be enough.

Mr. Reid's letter was notable because he has been widely viewed as an ally of the cable industry in Congress. The letter follows others from senators sent in late February that also raised concerns about the deal.

One was signed by five senators, including Bernie Sanders and Elizabeth Warren. Another, sent by Sens. Mike Lee (R., Utah) and Amy Klobuchar (D., Minn), the top Democrat and Republican on the Senate's antitrust panel, urged "particular attention" to the fact that Comcast and Charter together will control 70% to 90% of American broadband connections at speeds 25 megabits-per-second and higher. That is the FCC's threshold for what constitutes a broadband connection.

The senators said Charter's size could increase its leverage versus independent programmers and its incentive to harm the burgeoning online video marketplace.

Comcast dropped its bid to buy Time Warner Cable last year in the face of major concerns from the FCC and Justice Department.

Many analysts have predicted the Charter-Time Warner Cable deal will win approval, because the combined company wouldn't be as big as Comcast and wouldn't be an entertainment giant. (Comcast owns NBCUniversal.)

The letters from Congress could help the government wrangle concessions from the merged entity, some industry analysts said.

"Some have suggested that this letter should cause investors to rethink the now prevailing view that the...agencies will approve the deal in the near term, with conditions. We disagree," said a note from New Street Research.

Charter said in a statement: "For months we have worked with state and federal regulators to demonstrate New Charter's plan to add tens of thousands of American jobs, expand broadband access to millions of underserved homes, preserve an open Internet and offer fast unlimited broadband at a better value without additional modem fees." It also cited support from some online video providers including Netflix, which was a fierce opponent of the Comcast deal.

Write to John D. McKinnon at john.mckinnon@wsj.com and Shalini Ramachandran at shalini.ramachandran@wsj.com

(END) Dow Jones Newswires

March 01, 2016 19:50 ET (00:50 GMT)

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