Comcast, Time Warner Cable Deal Pauses Netflix Talks

Comcast deal may stall talks to carry Netflix on cable box subscriptions. 

A movie selected from among Netflix's "Watch Instantly" titles begins to download on a home computer screen.

A deal for Netflix to be carried on Time Warner Cable set top boxes would encourage other cable providers to carry the service.

By + More

Netflix fans of “House of Cards” may have to wait to get the online video provider as part of their cable bill, as talks for the company to be carried on subscriptions to Time Warner Cable have reportedly been stalled by that cable provider’s proposed purchase by Comcast Corporation.  

Comcast is focused on increasing customer downloads from its new X1 cable box and expanding its on-demand video content in a bid to compete with online video services including Netflix and Hulu, Bloomberg reports. A deal for Netflix to be carried on Time Warner Cable set top boxes would encourage other cable providers to carry the service but negotiations will likely not continue until regulators decide whether to approve Comcast’s purchase, sources told Bloomberg.

[READ: Comcast Deal Will Redefine Antitrust Review]

This makes sense because deals including licensing negotiations are often put on hold during merger reviews, says Mike McGuire, media and digital marketing analyst at Gartner, an information technology research firm.

"People want to consume content on-demand using services like Netflix, which work s outside of the programming schedule," McGuire says. "The growth of over the top video is why we are seeing some of this consolidation."

[ALSO: "House of Cards" May Fuel Net Neutrality Debate]

Analysts and Comcast officials predict regulators may approve the cable provider merger by the end of 2014, but the government may impose conditions on the deal, including rules to observe the net neutrality principle to treat all digital traffic equally, including traffic from competitors. Fears that Comcast will gain enough broadband ownership to disadvantage Netflix will be a key focus of the merger review, McGuire says. Comcast seems to have honored such net neutrality conditions placed on it by the Federal Communications Commission and the Justice Department as a condition of the company’s 2011 acquisition of NBCUniversal, McGuire says.

"Regulators want to avoid a large company using its power to control other markets," McGuire explains.

Netflix is growing from the success of its exclusive, original programming including "House of Cards," and "Orange is the New Black," and because it is available without a cable subscription, unlike its main rival HBO. Netflix costs $7.99 each month, while different cable providers offer HBO for between $15 to $20 per month. Netflix is planning to expand its services in Europe. HBO has been testing a stand-alone purchase of its services in Norway that differs from the company's model in the U.S., where it comes as a premium channel on top of a bundled cable subscription.