Federal Trade Commission staffers have formally recommended blocking the $7.5 billion Time Warner-Turner Broadcasting merger unless the companies can resolve antitrust concerns, The Wall Street Journal reported Wednesday.
Regulators and the companies have been meeting to work out an arrangement since top FTC staff members first threatened to recommend blocking the deal in May.FTC investigators say a marriage of the media giants would dominate the delivery of programs to the 63 million U.S. cable television customers and the production of programs themselves.
A key sticking point in the negotiations, according to the Journal, has been the role Tele-Communications Inc. would play in a combined Time-Warner-Turner.
TCI, the nation's biggest operator of cable systems, owns 21 percent of Turner and would own about 9 percent of the merged company - stock that would be voted by Time Warner Chairman Gerald Levin. Regulators are concerned the direct link would reduce TCI and Time Warner's incentives to compete against each other, the newspaper said.
Staffers' recommendations could be discussed by the commission as early as next week, the Journal said. The commission does not have to vote, but it could issue a decision to block the merger if it wants to further pressure the companies to make concessions.