Comcast-Time Warner Cable Gets Murky With Stalled FCC Decision

SAN DIEGO ( TheStreet) -- Just when it seemed the decks might get cleared for a decision on Comcast's (CMCSA - Get Report) ambitious plans to merge with Time Warner Cable (TWC), a delay in the regulatory process has thrown doubt on the $45 billiondeal that would combine the largest and second-largest U.S. pay-TV operators.

Comcast, in a blog postsigned by top executiveDavid Cohen, said it doesn't expect the Federal Communications Commission to make a decision on the merger proposal until mid-year. The announcement appeared to point to an increasingtug-of-war between the agency and the companies. The delay comesafter many industry observers concluded that regulators were more likely to acceptthe deal after the FCC approved rules mandating net neutrality, which had the high-profile backing ofPresident Obama.

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But with each passing day, the outlook becomes less. For Comcast and Time Warner Cable, the elongated process, which began in February 2014, that the FCC will demandmore concessions from the company, particularlyto prevent Comcast, which owns NBC/Universal other pay-TV channels, from favoring their content over competitor networks.

Matthew Harrigan, media analyst at Wunderlich Securities, who expects that the FCC will eventually approve the deal, acknowledged that "intense consumer/political resistance" has become a darkening cloud over a deal that seemed to have gained strength a month ago following the net neutrality order.

Complicating matters, the FCC appears to have heightened scrutiny on how these two pay-TV providersdo business with the networks they carry. The commission is currently waiting for a US Federal Appeals Court decision on whether third-parties can review video-programming contracts between content providers. One case in particular has stood, said Yong, citing Comcast's contracts with Viacom VIAB and Discovery DISCA.

The delay in the deal approval may also play into Discovery's hands, Yong said in an investor note, explaining that its carriage deal with Comcast comes up for renewal at the end of June. "If the merger closes, this could give [Discovery] management more leverage to negotiate better terms," Yong said.

Questions about how the deal will conclude have raised the profile of Charter Communications, which attempted to secure a deal with Time Warner Cable but was outmaneuvered by Comcast. That could make Time Warner Cable more attractive to investors if it goes back in play as a takeover candidate. Charter has financing at the ready to make another bid for the company if the deal with Comcast falls through, Antlitz said.

Despite the drawn-out review process, senior analyst Marci Ryvicker with Wells Fargo Securities in a research report said she remained confident of the merger deal and reiterated the outperform ratings for Comcast, Time Warner Cable and even Charter.

What may come next is that the FCC requires Comcast to more readily make contentavailable from NBC-Universal forover-the-top platforms such as DISH's (DISH) Sling TV. DISH, for its part, has actively opposed the merger. Talks between Comcast and Apple, which is expected to unveilits own streaming video service in the fall, reportedly failed to come to an agreement on using NBC-Universal content.

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Comcast-Time Warner Cable Gets Murky With Stalled FCC Decision