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Federal Communications Commission staff are advising agency commissioners to clear Comcast Corp.’s $28.6 billion acquisition of AT&T Broadband, sources said. The merged company would unite two regional cable monopolies with a combined 22 million subscribers. Blair Levin, an analyst at Legg Mason Inc. in Washington, said he expects the four commissioners to approve the deal soon. According to the FCC’s 180-day window to complete its investigation, the agency has roughly two weeks to rule. “The review clock can be extended, but I expect them to approve the deal in the next 13 days,” he said. “The FCC has already decided that the transaction doesn’t diminish competition in any relevant market, and that’s the key issue.” By contrast, FCC regulators blocked EchoStar Communications Corp.’s $18 billion merger with Hughes Electronics Corp. and its DirecTV unit because it would create a monopoly in some markets and a duopoly in others. The only major regulatory concern with Comcast-AT&T Broadband is that it could put too much program-buying power in one company’s hands, Levin said. To secure FCC approval, the companies have promised to place in a disposition trust their stake in a programming venture with Time Warner Entertainment, a division of AOL Time Warner Inc. Michael Goodman, analyst at the Yankee Group in Boston, said AT&T Broadband, which has a 25.5 percent stake in Time Warner Entertainment, is likely to sell its stake in the unit to AOL Time Warner as part of the deal. “The real issue is that because of the sheer amount of subscribers, AT&T Broadband and Comcast will be able to get better pricing from all major programming firms,” he said. But Goodman does not expect Comcast and AT&T Broadband to have to make major concessions. “You have two distribution companies merging,” he said. “It doesn’t bring up the kind of horizontal integration issues that were an issue in the AOL Time Warner deal.” Goodman also said Comcast’s commitment to provide cable subscribers with high-definition television could carry weight with FCC Chairman Michael Powell. Of Comcast’s 8 million subscribers, 1.3 million already have access to HDTV, which Goodman called “significantly better” than most other major cable companies. Paul Gallant, FCC special adviser to the agency’s cable bureau, declined to comment on the staff recommendation. Powell said at a broadcast industry conference Tuesday that the agency was “not far away” from approving the deal. The Department of Justice is expected to close its Comcast-AT&T investigation within weeks. Comcast agreed Dec. 19 to acquire AT&T Broadband in a deal initially valued at about $37 billion. Consumer groups have charged the transaction would give Comcast enormous control over high-speed Internet access and over providers of cable programming. Comcast and AT&T counter that the deal will let them roll out rival phone services and deliver entertainment programming more efficiently to consumers. Copyright (c)2002 TDD, LLC. All rights reserved.

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