Comcast and Time Warner Cable are preparing to meet with Justice Department officials this week to discuss competition concerns over their planned $45 billion merger, a source familiar with the situation confirmed to CNBC.
The meeting Wednesday, first reported by The Wall Street Journal, would aim to negotiate possible concessions addressing those concerns. The paper said it would be the first time the two cable giants have met with regulators since announcing their proposed deal a year ago.
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Staffers at the Justice Department and the Federal Communications Commission remain concerned the combined company would have too much power in the Internet broadband market, and would have unfair competitive leverage against TV channel owners and businesses offering online video programming, the Journal said.
"It's not the total number of broadband subscribers, which is a problem for the government. ... [It's] control of the most important markets," BTIG media and technology analyst Richard Greenfield said Monday.
"The government is going to want something very substantial to approve," he said in an interview on CNBC's "Squawk Box," speculating about a possible demand to divest the New York and Los Angeles markets, "which is the whole point of the transaction."
"Remember [there's] no breakup fee. So Comcast could walk," said Greenfield, but added that Comcast won't sit still. "What are they going to buy if they don't buy this? Do they go wireless? Do they go Europe? Do they go in enterprise? Comcast is not going to just sit around."
Comcast owns NBCUniversal, parent company of CNBC.
Representatives of Comcast and Time Warner Cable and the Justice Department did not immediately respond to requests for comment.
"This deal certainly lost it's air of inevitability," telecommunications analyst Craig Moffett said Monday.
"It's not going to be the conditions are too strict, we're walking. It's going to be either 'yes' or no,'" the MoffettNathanson Research partner said in a "Squawk Box" interview. "It's either a thumbs-up or a thumbs-down," he added, predicting the likelihood of the deal going through at lower than a coin toss.
News of the planned meeting followed a report by Bloomberg on Friday that staff attorneys at the Justice Department's antitrust division were nearing a recommendation to block the deal.
A spokesman for Time Warner Cable questioned the Bloomberg report, saying on Friday the company had been working productively with the Justice Department and the FCC.
A source close to Comcast said on Friday that discussions with the DOJ had been positive and that the FCC was still gathering material from companies, making it early for any discussion of conditions for a deal.
The Bloomberg report said Justice Department attorneys were citing concerns for consumers as they lean against it, and their review could be handed in as soon as this week. A final decision would be made by senior officials.
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In its report on Saturday, the Journal said the agencies were nearing the final stages of their review. Discussions on potential remedies to concerns would be an indication that the agencies had not yet made a firm or final decision on the merger, the paper said.
But it added the meeting could be the first of many and said it was not clear whether the companies could offer concessions that would satisfy the regulators.
Disclosure: Comcast is the parent of NBCUniversal and CNBC.
—Reuters contributed to this report.