RealTime IT News

AOL-Time Warner, No Slam Dunk

According to reports coming from the Washington Post this weekend, loose lips close to the America Online and Time Warner marriage say the Federal Trade Commission may be prepared to block the proposed merger. The two sides are at an impasse over language related to a guarantee to allow rivals access to Time Warner's fat pipes. Apparently, government trustbusters don't want empty promises - they want it in writing.

Things were starting to look up for the billion-dollar mega-merger, when earlier this month, European Union antitrust officials finally agreed to back the deal. EU regulators were previously prepared to throw up roadblocks to an AOL-Time Warner merger because of the media giant's existing merger plans with British-owned EMI Group that would create one of the largest music publishers on the planet. Time Warner and EMI made a number of concessions to win approval, including the sale of EMI's flagship Virgin Records label.

In the U.S., the FTC has reservations over AOL-Time Warner's consistent foot-dragging when it comes to making a firm commitment to allow competitors onto its high-speed cable infrastructure. Late last month, the number two Internet service provider, Earthlink , complained about Time Warner's hardball negotiating tactics. The ISP said Time Warner demanded the ability to set prices for Earthlink's service as well as the lion's share of its advertising revenues.

AOL and Time Warner have been long on promises, but both have begged regulators not to make those same promises legally binding as a condition of approving the merger. The reasoning behind AOL-Time Warner's persistent hedging is all-to clear according to Earthlink's vice president of law and public policy. "They're taking with the other hand by trying to impose on us financial terms that would make it difficult, if not impossible, for us to offer Internet service. Unfortunately, what we've seen over the last seven months since then, in negotiations with Time Warner to put these words into action, we've found that in some respects they haven't been living up to their word."

A spokesman for Time Warner wasted little time back-peddled saying, "Nothing in our conversations should be taken as a final proposition. Time Warner Cable is committed to working creatively with Earthlink and others in the ISP community to provide consumers the choices they want in cable Internet service." And anyone who believes that double-speak, needs to adjust those rose colored glasses. By the looks of it, the FTC is doing just that.

Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.

Want my daily missives delivered with your morning toast and coffee? Sign up for my DealTracker newsletter.