To no one’s surprise, AOL Time
Warner gave AOL Time Warner permission to run Internet service over its
cable network Wednesday.
The deal, announced Wednesday afternoon by AOL Time Warner chief executive
officer Gerald Levin, allows its Internet branch, America Online, Inc., to
offer its popular services over Time Warner Cable lines.
The irony was lost on nobody, as the deal formalized the unspoken reason for
the AOL and Time Warner mega-merger in the first place. The $106 billion
deal gained approval from the Federal
Communications Commission and the Federal
Trade Commission only two weeks ago.
In order to pass muster with both commission’s, Time Warner had to promise
to open its cable network to at least one independent Internet service
provider before signing AOL. In December, Time Warner announced its deal
with EarthLink Inc., giving the
nation’s second-largest ISP access to its network.
AOL Time Warner has spent Wednesday assuring Wall Street, and by extension
American investors, that the combined company is profitable, with its fourth
quarter and year end 2000 financial statement.
The numbers show AOL Time Warner’s Internet arm and AOL Time Warner’s cable
arm in a favorable position.
With December Internet subscribers topping 1.2 million in the U.S., AOL Time
Warner expects to leverage that popularity into the high-speed cable
Internet service arena, which has been limited to a limited playing field of
competition.
Once AOL Time Warner is on its own network, officials expect to leverage the
full weight of its own entertainment divisions including cable TV stations,
news organizations, movies and music on the Internet.
The result is a cross-promotional dream for AOL Time Warner marketers and
accountants, who see the integration as more efficient and cost-effective.
