AOL Time Warner Makes High-Speed Deal With Self
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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.