U.S. Approval Near, Case Says
_____Special Report_____
By Alec Klein
Washington Post Staff Writer
Wednesday, December 6, 2000; Page E01
NEW YORK, Dec. 5 –– America Online Inc. chief executive Steve Case said today that he expects the company to soon win federal approval of its takeover of Time Warner Inc., offering an upbeat assessment of the companies' recent efforts to meet regulator concerns.
AOL and Time Warner announced last month that they had reached agreement with rival Internet service provider EarthLink Inc., allowing the Atlanta-based competitor to offer its service over Time Warner's high-speed cable lines. Antitrust regulators had demanded such a move to ensure that AOL would not use Time Warner's pipes to dominate the ISP market.
Case said the deal allows EarthLink to control the home page on its online service and to bill its customers directly. AOL and Time Warner, meanwhile, continue to negotiate with other Internet service competitors to further allay government concerns about the deal, according to sources familiar with the matter.
"I'm here to tell you we're in the home stretch," Case said in a speech before investors, analysts and the media at the UBS Warburg Media Conference in New York.
Case said he expects the deal to close by early January. He said he is "quite certain" that the merger will close before the Jan. 20 presidential inauguration.
While the companies close in on a potential settlement with the Federal Trade Commission over their $183 billion merger, they have opened negotiations with Verizon Communications Inc., the New York-based telecommunications giant, sources said.
Verizon operates a moderate-size Internet service with more than 900,000 subscribers. Time Warner is the nation's second-largest cable provider, reaching about 20 percent of the market. A deal could be reached before the merger is closed, but sources say talks could extend beyond that, if Verizon wants to review the FTC's consent decree and the terms of access offered to other ISPs.
Officials at AOL, Time Warner and Verizon declined to comment.
Verizon, which has a vast wireless business in the United States, offers online service over traditional dial-up telephone lines and through DSL, or digital subscriber line, a high-speed service that also relies on telephone lines. But it does not offer its Internet service over high-speed cable. The company has recently made moves to get into the cable-access business: A couple of weeks ago, Verizon sued Cox Communications Inc. in federal district court in San Diego, seeking access to its cable system.
Meanwhile, Dulles-based AOL and Time Warner of New York are continuing to negotiate with MSN, Microsoft Corp.'s Internet service, but the two sides may not reach an agreement before the merger is approved, sources said.
The FTC, which may vote on the merger next week, has required only that the companies reach a deal with one ISP before approving the merger, sources have said, but the companies are taking on all comers in an attempt to demonstrate their commitment to "open access." The FTC also is looking at conditions to ensure competition in interactive television, a nascent field that AOL and Time Warner are expected to develop, sources have said.
Although the companies have faced tough negotiations with the Federal Trade Commission, Case indicated that after the FTC acts, he expects to move "expeditiously" with the Federal Communications Commission, the other U.S. regulatory agency that is reviewing the media merger. The deal was first announced Jan. 10.
The FCC had said it would not act on the merger until after the FTC had finished with its review. The FCC is gearing up for possible approval by the FTC, and its staff is drafting a recommended order for the five-member commission, sources said. FCC staffers want to put the commissioners in a position to be able to act quickly, sources said. The FCC, made up of three Democrats and two Republicans, often takes two to three weeks to review, edit and suggest changes, if necessary, to lengthy and complex staff proposals.
Like the FTC, the FCC has been looking at issues of open access and interactive television, but it also is focusing on concerns that AOL will monopolize the instant-messaging market. The technology allows Internet users to send notes to each other in real time. The FCC is also examining Time Warner's cross-ownership of cable assets with AT&T Corp., the nation's biggest cable provider, sources said. AT&T owns 25.5 percent of Time Warner Entertainment, which includes much of its cable holdings. FCC spokeswoman Michelle Russo declined to comment. |
