AOL-Time Warner Deal Decision Nears
By KALPANA SRINIVASAN
Sunday December 10, 3:30 pm Eastern Time
Associated Press Writer
WASHINGTON (AP) -- The merger between media giant Time Warner and Internet leader America Online hangs in the balance as government officials edge toward a decision.
The companies last month extended negotiations with the Federal Trade Commission to mid-December, giving antitrust regulators time to review additional developments in the deal, valued at $162 billion when it was announced in January.
A decision could come as early as this week. The FTC has scheduled a closed hearing on an undisclosed enforcement action Thursday -- the type of forum where the agency's five commissioners could discuss or vote on the merger.
The decision also could be postponed, as has occurred several times during the FTC review.
European regulators signed off on the deal -- the largest in U.S. corporate history -- in October. In addition to the FTC, the two companies also need clearance from the Federal Communications Commission. The FCC has said it will wait until the antitrust process at the FTC is complete before acting.
Over the past months, the FTC has raised red flags about the possible anticompetitive effects of such a combination. The deal brings together a media conglomerate that owns a vast network of cable systems and shows, and the nation's top Internet service provider, with 25 million subscribers.
To assuage wary regulators, the companies promised they would address one key concern by giving AOL's rivals access to Time Warner's high-speed cable lines to deliver Internet service.
Under pressure, they backed this pledge up with a signed deal: Last month, Time Warner sealed an agreement with AOL's chief competitor, EarthLink (NasdaqNM:ELNK - news), to offer that Internet service over its cable systems. That means consumers who subscribe to Time Warner's high-speed Internet cable service will have choices besides AOL for their online provider.
The FTC staff has been reviewing the terms of the EarthLink deal to see if it passes muster as part of the broader merger review.
Some Internet providers still argue that the terms reached by EarthLink may not set a suitable blueprint for negotiations in the rest of the industry.
Some critics and rivals also have raised concerns about the ability of the combined business to horde Time Warner's content, sealing it off from other distributors.
Time Warner's treasure trove of content includes HBO, CNN and movies and music from Warner Brothers. The proposed merger has triggered concerns that Time Warner may not give Internet providers other than AOL equal access to its content.
``The fundamental issue is how to prevent them from leveraging their power over transmission and enormously popular content,'' said Gene Kimmelman of Consumers Union.
Conversely, AOL could give preferential treatment to Time Warner's content on its interactive television and internet services, giving less opportunity to material from other media outlets, some fear. Top company officials have said that consumer demand for variety will drive them to give access to a broad range of media.
On the Net:
America Online site: corp.aol.com
Time Warner site: timewarner.com |
