FTC clears $76bn AOL/Time Warner merger
The £76bn merger between US ISP AOL and media giant Time Warner has been cleared by the US anti-trust authority, the Federal Trade Commission, after the two companies pledged to allow competing ISPs carriage on their high-speed cable network and access to their content.
LONDON (Brand Republic) – The £76bn merger between US ISP AOL and media giant Time Warner has been cleared by the US anti-trust authority, the Federal Trade Commission, after the two companies pledged to allow competing ISPs carriage on their high-speed cable network and access to their content.
The FTC’s five members voted unanimously in favour of the deal after the two companies made an 11th-hour offer to increase competitors’ access to their cable networks and log complaints from rivals about obtaining Time Warner content.
The deal now faces an investigation by the Federal Communications Commission, the US government agency which regulates US national and international communications over radio, TV, wire, satellite and cable.
The FCC’s investigation is not expected to be as lengthy as the FTC’s and AOL/Time Warner hope the deal will be finalised by January 20.
The merger’s regulatory clearance carries the condition that AOL/Time Warner opens up its cable network -– which serves 20% of the US market -– to competing ISPs to ensure that consumers have a choice of service providers.
As part of this concession, Time Warner agreed to ink a deal with one ISP, EarthLink, at an earlier stage in the negotiations. It must also launch its cable internet service before AOL’s high-speed access service is offered as part of the concession.
Three further competing ISPs must go live within 90 days of AOL’s launch of its high-speed access service. EarthLink plans to offer its service in the second half of 2001. EarthLink is the US’s second largest ISP behind AOL, which has 26m subscribers.
The companies have agreed not to interfere with rival content that will be carried on its network. The companies have agreed not to discriminate in offering Time Warner content to rivals, or in its treatment of rival’s content.
The FCC inquiry is expected to concentrate on AOL’s popular instant messaging service, which does not currently communicate with rival messaging products.
AOL could be forced to allow its instant messaging customers the ability to communicate with Microsoft’s MSN, and Yahoo! customers.
The terms of deal agreed by AOL/Time Warner with the FTC has been heralded by Disney, a major opponent to the merger, as a huge victory for consumers and for competition.
However, AOL/Time Warner emerged triumphant from the negotiations and described the concessions as “in line with an open access pledge made earlier this year”.
The merged giant will also be able to charge independent ISPs high premiums for carriage on the high-speed cable network.
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