Comcast and Time Warner Cable announced today that the proposed merger of the two broadband and cable TV giants has been called off. No specific reason was given in the announcement but the FCC staff had recently recommended that the deal be examined by an administrative law judge, throwing a gigantic roadblock into the deal which has been in the works for more than a year.

The $45.2 billion Comcast offer would have been one of the largest mergers in US history.

Reuters:

Comcast Corp (CMCSA.O) and Time Warner Cable Inc (TWC.N) said on Friday they had abandoned their proposed $45 billion merger after U.S. regulators said the deal would give Comcast an unfair advantage in the Internet-based services market.

The Department of Justice said the plan to merge the two biggest U.S. cable companies would have made Comcast an "unavoidable gatekeeper" for broadband services.

The deal had faced vocal criticism from some politicians, media company executives and diverse consumer and industry groups, who had worried it would create a monolith with too much control over what Americans do online and watch on TV.

Federal Communications Commission Chairman Tom Wheeler said on Friday that the merger would have posed an "unacceptable risk to competition and innovation".

The U.S. cable TV industry has been rapidly consolidating in the past few years as it grapples with the rising popularity of satellite TV and Web-based entrants such as Netflix Inc (NFLX.O).

"Today, we move on," Comcast Chief Executive Brian Roberts said in a statement.

I was a Comcast subscriber for 5 years until I made the switch to satellite. Customer service and technical help left much to be desired, so increasing the size of the company by 50% probably wouldn't have helped make those departments any better.

While the idea that ecomomies of scale would have benefitted consumers is probably correct, a company that size is also a threat to competition. The 30 million consumers who subscribed to the new Comcast would have given the company unprecedented leverage in fee negotiations with networks. They would have also dominated the broadband market.

The FCC's concerns were justified in this case, although some might point to an anti-business bias at the agency as the real motivation for mucking up the deal. That may be true, but blocking this merger was the right call.