Ruination rumors surround the America Online
Inc. and Time Warner, Inc.
mega-merger as regulators on both sides of the Atlantic wrestle with the
gargantuan deal.
Yesterday, the The Washington Post reported that U.S. antitrust officials may ask America Online to sell its $1.5 billion stake in satellite giant Hughes Electronics Corp. before they would approve its takeover of Time Warner
.
Both AOL and Federal Trade Commission
attorneys remain mum about the unnamed sources murmuring that the
Internet-media marriage may be nixed by the FTC.
The Commission’s lawyers reportedly contend that the issue of “open
access,” which plagues the merger review at the Federal Communications Commission, should
not be limited to coax-bound Internet services.
AOL’s wired and wireless broadband initiatives remain at the mercy of
continued regulatory scrutiny, even though the online service provider is
continues to recruit Independent Internet services providers to join them
in sharing coax-based broadband services.
At risk is AOL’s $1.5 billion investment in the satellite subsidiary General Motors Corp. .
America Online and Hughes began beta-testing the satellite-based high-speed
Internet access in June. The two firms originally expected to offer Hughes’
satellite service to AOL’s 26 million global online subscribers this fall.
The broadband service in the sky beats at the heart of America Online’s
duly dubbed AOL TV and AOL-Plus high-speed Internet services rescheduled
for launch in 2002, as well as AOL’s recent litany of Latin American
investments.
The top Internet access provider in the U.S. is in a high-stakes race to
beat chief rival Microsoft Corp. to
market in satellite-based services. Microsoft is
experiencing manufacturing delays in delivering the set-top boxes that
would feed bandwidth-hungry consumers with downloads speeds more than 14
times faster standard computer modems.
Microsoft invested $50 million in a joint venture with No. 2 satellite
broadcaster EchoStar Communications
Corp. and Gilat Satellite Networks Ltd.
to provide Internet access and TV programming under its WebTV brand.
As if FTC and FCC regulatory examinations were deficient, the European
Union plans to hear what AOL and Time Warner chief executives have to say
about the merger Thursday in a formal hearing on the deal.
It’s no European holiday for Time Warner, whose joint venture between music
subsidiary Warner
Music Group and EMI Group is set for
EU review on Wednesday.
The European Commission is in the process of conducting an extended
antitrust probe of the planned mergers, but refused to comment as to
whether it may block or restrict linkage of Time Warner with EMI and AOL.
In an earlier statement, the European Commission said they were concerned
about the impact AOL’s vertical integration of Time Warner companies could
have on competitors in the region.
Back on this side of the “Big Pond,” a U.S. House Commerce subcommittee announced Friday
that it would hold a hearing next month to review interactive television
products being rolled out by America Online.
(R-LA) chairs
the house subcommittee on trade, telecommunications and consumer
protection. Tauzin’s office said it would review the details of AOL’s plans
to deploy interactive television services and the implications it might
have for U.S. consumers.
AOL agreed in January to acquire Time Warner for about $164 billion in a
deal that would transform the two companies into the world’s largest single
media firm. There is no end in sight for U.S. and European regulators that
have so far refused to sign off on the deal capable of dominating
television programming and Internet services in both spots on the globe.
