AOL and Time Warner Ink Deal with FTC

14 December 2000

The seemingly endless saga of the Time Warner/AOL merger took one step closer to completion yesterday as the duo signed an agreement with the Federal Trade Commission to alleviate antitrust concerns.

The FTC is to vote on the merger today, and the proposed new deal, which requires the companies to open their cable networks to rivals, may push the regulator towards a vote of approval.

Although details of the pact have not yet been released, they are believed to include clauses committing Time Warner to sign at least one of AOL’s high speed cable internet rivals in TW-served cities before AOL can use the same lines. In most cities, a further two or even three online service companies must be given access to Time Warner’s lines within 90 days, or AOL could face civil sanctions.

AOL will also be honor bound to retain deals with telephone companies offering high-speed digital services in cities where TW controls cable lines. It must also tell the FTC if any internet or interactive TV rival complains that it is unable to get access to Time Warner’s online content at a fair price. The two companies also vowed that if AOL is offered favourable terms by cable companies outside areas served by TW, the same terms would be offered to AOL’s rivals by Time Warner.

In return for these concessions, AOL will not have to sell its stake in high-speed internet service provider DirecTV.

In order to protect regionally-based ISPs, the duo must also offer other online service companies in TW-dominated areas terms at least as favourable as those given to Time Warner’s new ISP partner Earthlink.

The agreement marks a victory for the FTC, which threatened to block the merger in court on the grounds that the combined companies would dominate the web.

News source: Wall Street Journal