Internet service giant America Online Inc. late Thursday leapt over the final regulatory hurdle to acquire Time Warner Inc. by receiving conditional approval of the deal from the Federal Communications Commission. Officially dubbed AOL Time Warner Inc., the merged firm possesses combined revenues totaling more than $30 billion a year.
However, the commissioners voted 3-2 to place restrictions on the merged company’s instant messaging (IM) system when it operates over Time Warner’s cable lines and that rival ISPs must have access to the firms cable pipeline.
In a statement, FCC Chairman William Kennard said “These conditions are designed to protect the open competitive nature of the Internet.”
After months of internal discussion at the federal agency, the commissioners agreed to approve the AOL’s $106.2 billion purchase of the media and cable conglomerate, which creates an unparalleled company spanning television, film, print and Internet mediums.
Time Warner operates the second-largest cable system in the U.S. and publishes magazines like Sports Illustrated, People, and Time. AOL has nearly 29 million Internet subscribers worldwide, including 2.6 million CompuServe members.
The two companies won antitrust approval from the Federal Trade Commission on Dec. 14 last year only after agreeing to share cable delivery systems with ISP rivals before AOL could launch its own services over the same network.
Under the conditions adopted by the FCC, the companies are still required to allow consumers to have their choice of ISPs that are carried on Time Warner’s cable lines without being pressured to subscribe to AOL’s service. Additionally, if AOL Time Warner launches instant messaging services across its high-speed cable pipeline, it will have to make it interoperable with rival instant messaging services.
FCC Commissioner Harold Furchtgott-Roth said he opposed that regulatory conditions be applied to the merger approval.
“The commission has speculated about as yet undeveloped facts that are only tangentially related,” Furchtgott-Roth said.
But the transfer of cable broadcast licenses from Time Warner to the merged AOL Time Warner is going to receive a detailed review by the FCC, even thought it will not impose conditions on interactive television at this time. Instead, the Commission plans to hold a broad inquiry into the convergence of emerging technology.
