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FTC Delays Action on AOL-Time Warner Deal

November 10, 2000|From Reuters

WASHINGTON — The Federal Trade Commission Thursday voted unanimously to delay a lawsuit blocking America Online Inc.'s proposed $127-billion purchase of Time Warner Inc. for up to three weeks, while the companies draft new proposals to address antitrust concerns.

"The Federal Trade Commission met today to consider an enforcement action against the proposed merger of AOL and Time Warner," the antitrust agency said in a statement, meaning it was prepared to go to court to block the merger.

The companies and the FTC have been wrangling over conditions that would require Time Warner to provide open access to its cable system to competing Internet service providers, a source familiar with the situation has said.

"The parties have committed in the last 24 hours to offer new proposals to address competitive issues in connection with the proposed merger," the agency said.

The FTC voted 5-0 to delay any action on the deal "for a period of not more than three weeks."

The parties have been negotiating for months, and other issues also remain unresolved, the source said earlier Thursday.

"We are continuing conversations with regulators and they have been constructive," said Time Warner spokesman Ed Adler.

An AOL spokeswoman made a similar comment.

Shares of Dulles, Va.-based AOL closed down $3.62 to $52.68 and New York-based Time Warner's shares closed down $4.36 to $78.84 on the New York Stock Exchange.

The decision to postpone action disappointed one analyst who had expected that AOL and Time Warner could close the deal this fall.

"We know AOL and Time Warner have already agreed in principle to the open access issue, now clearly there is more to it than just tying up some loose ends," said ING Barings analyst Youssef Squali.

The new company would have unprecedented reach across traditional and new media, allowing the delivery of Time Warner programming and magazine content onto the Web and giving AOL the ability to offer high-speed access to the Internet to cable subscribers.

And that is the concern not just of rivals, but of the FTC: Whether Time Warner would be able to unfairly dominate high speed delivery.

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