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Justice Forces Divestiture in CommScope-Andrew Deal - Broadcasting & Cable

Justice Forces Divestiture in CommScope-Andrew Deal

Deal in Jeopardy Unless Changes Are Made
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While the Federal Communications Commission has been grabbing all of the headlines lately on cable concentration, the Justice Department got into the act Thursday.

Justice said it would block the $2.6 billion acquisition of Andrew by CommScope unless the former divests its minority interest in Andes Industries. CommScope and Andes are two of four companies that provide so-called drop cable to cable TV companies, Justice said. Drop cable is the coaxial cable that goes to and into a subscriber's house and represents about $500 million in potential business.

The companies agreed to divest Andrew's 30% stake in Andes, but the way it works is that Justice files suit to block the merger and at the same time offers up the consent decree in the same D.C. District Court. If accepted -- and it almost always is -- the decree, essentially an agreement between the government and the companies, settles the matter as far as Justice is concerned.

Justice was also concerned with giving CommScope the ability to name directors at Andes. There is a law against "interlocking directorates" between competitors.

"This settlement ensures continued competition in a key component necessary for the transmission of cable television, which is an important product for millions of consumers," Antitrust Division chief Thomas Barnett said.

CommScope pulled in about $550 million in broadband revenues (cable and hardware) last year, with Andrew recording $1.3 billion from its antenna and cable business, according to numbers reported to Justice.

The deal now gets published in the Federal Register per the Tunney Act, with a 60-day window for public comment.

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