America Online's $111 billion merger deal with Time Warner drew a critical approval from the Federal Trade Commission today, after the companies agreed to take several steps to ensure that the combination wouldn't limit access to cable modem lines to services offered by AOL or its partners.
Time Warner services 20% of the country's cable TV households and there had been complaints that the original deal would have removed competition among internet providers for broadband. Some feared it would allow AOL to put a stranglehold on competitors to Time Warner's cable TV networks who wanted to offer their own interactive or broadband products.
FTC Chairman Robert Pitofsky said the Commission's concern "was that the merger of these two powerful companies would deny to competitors access to this amazing new broadband technology. This order is intended to ensure this new medium, characterized by openness, diversity and freedom, will not be closed down as a result of the merger."
The FTC approved the deal unanimously after imposing several conditions including a requirement that AOL begin offering a rival broadband service on Time Warner systems for 90 days before offering its own. The deal still needs Federal Communications Commission approval, which could come later this month, and the FTC's agreement is still open for public comment. AOL has indicated the deal will close early next month.
Copyright December 2000, Crain Communications Inc.