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RealTime IT News

AOL Gets High-Speed Onramp

In the first blockbuster deal of 2000, America Online Inc. and Time Warner Inc. Monday merged in a stock deal worth $350 billion.

In the largest corporate merger in history, the companies plan to create the world's first fully integrated media and communications company to offer a wealth of branded information, entertainment and communications services to the world. Combined, the companies boast more than $30 billion in revenues and 80,000 employees.

Perhaps most significant for AOL, the deal will give the online service access to a high-speed network in Time Warner's Road Runner cable modem service.

Time Warner (TWX) shareholders will receive 1.5 shares of AOL. America Online (AOL) shareholders will receive one share of the new company, to be known as AOL Time Warner.

When complete, America Online's shareholders will own approximately 55 percent, with Time Warner's shareholders owning a 45 percent stake in the new company. The stock will be traded under the symbol AOL on the New York Stock Exchange.

Steve Case, chairman and chief executive officer of AOL, will become chairman of the board of the new company. Gerald M. Levin, Time Warner's chairman and chief executive officer, will become AOL Time Warner's chief executive officer. The two plan to focus on technology developments and policy initiatives in running the new behemoth.

Time Warner Vice Chairman Ted Turner will become vice chairman of the new company. Time Warner President Richard Parsons and America Online President and Chief Operating Officer Bob Pittman will be co-chief operating officers of the company. The full board will consist of 16 members, with eight appointed by each company.

The merger will combine Time Warner's media, entertainment and news brands in addition to its advanced broadband delivery systems with America Online's Internet franchises and technology, including some consumers' favorite online brands, as well as unmatched e-commerce capabilities.

The agreement allows Time Warner to combine its Road Runner cable Internet service with AOL, the largest ISP on the Web. Case said the merger is a win for those fighting the open access Internet access debate.

"We started raising the issue of open access a couple of years ago," said AOL's Case. "We really were focused on the fact that for the Internet to continue to flourish, we needed to have consumer choice, we needed to have compeitition among ISPs and that continues to be our view."

"Today we are announcing that we are committeed to the concept of opening [access] up and stimulating user choice."

Greg Simon, openNET Coalition co-director, said the AOL-Time Warner deal is a wake-up call for the cable industry.

"The number two cable company has joined America Online, a leading advocate for open access and a continuing member of the openNET Coalition," Simon said. "The openNET Coalition will continue to fight for open access to all cable networks and we will continue to urge the federal government to make open access the rule for the entire cable industry."

Michael Graham, an Internet analyst at Robertson Stephens, said the merger is a good one for AOL.

"In our view, the company will have an unprecedented array of management talent, brand power and reach. In addition, we believe this merger largely clear away the biggest concerns facing AOL stock, namely broadband and price pressure from free-access providers. Longer term, we believe this move can catapult the combined company into the number one spot as the largest company in the world."

AOL Time Warner's brands will include AOL, Time, CNN, CompuServe, Warner Br