Feds figure out that the Comcast deal looks the same from Washington as it does from California

by Steve Blum • , , ,

Looks the same from either side.

The federal justice department might save the California Public Utilities Commission the trouble of killing the Comcast/Time Warner/Charter deal.

First Bloomberg reported that the justice department is about to send the matter into a proceeding – an administrative hearing – that would, in all likelihood, end with the mega-merger and market swap being tanked on anti-trust grounds. Then, the Wall Street Journal followed up with an article saying that Comcast and Time Warner execs were planning to meet with the justice department on Wednesday to try to negotiate their way out of that dead end process. The fact that this will be the first time that the companies have met with federal regulators to discuss the merger is considered a bad sign – if either the justice department or the FCC were interested in coming up with a settlement, rather than an outright rejection, talks would have started months ago.

When it’s trying to decide whether or not a proposed merger would concentrate too much market power in the hands of a single company, the justice department relies on a metric known as the Herfindahl–Hirschman Index. Without getting into the geeky details (click here if you want to, though), Comcast’s monopoly power in California would be double the allowable level under federal justice department standards.

The CPUC’s office of ratepayer advocates completed a thorough analysis of the impact of the proposed deal in California, which played a notable role in commissioner Mike Florio’s proposal to kill the deal altogether. It’s encouraging that federal officials are finally following that lead.f