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David Connell and K.C. Neel
Now that the European Commission has OK'd the merger between America Online and Time Warner, attention is turning to U.S. regulators, who are expected to rule on the union as soon as next month.
The merger is coming under increased scrutiny by the Federal Trade Commission and Federal Communications Commission, and the list of opponents to the AOL Time Warner merger continues to pile up.
Some analysts expect regulators to place stringent rules on the merger to make sure AOL Time Warner doesn't exert too much power. Walt Disney, NBC and the National Association of Broadcasters (NAB) all have voiced concerns about the merger, and some industry watchers believe the companies' worries are gaining steam on Capitol Hill.
The main regulatory issues in the United States center on open access of Time Warner's cable networks for AOL's competitors and instant messaging. FTC officials and AOL executives also are sparring over how to ensure competition in the emerging interactive TV market. The talks could take weeks, sources close to the company say.
Meanwhile, regulators were quick to rebuff Disney last week for business tactics related to the company's opposition of the merger. The FCC's Cable Services Bureau opened an investigation to find out how and why Mouse House attorneys leaked confidential e-mails on the AOL deal. Disney representatives, who have been virulent opponents of the merger, are now prohibited from viewing confidential documents under the FCC's protective order.
The EC gave its final approval after AOL agreed to sever its ties with German media conglomerate Bertelsmann AG. The commission wanted to prevent a market dominance in the online distribution business in Europe, where AOL continues to be a leading dial-up Internet access provider.
The EU's blessing of the AOL Time Warner marriage came a week after the commission blocked the planned merger between British recording company EMI and Time Warner's Warner Music.
In a show of support for the merger stateside, the National Cable Television Association (NCTA) sent a letter to FCC Chairman William Kennard berating the NAB's latest filing on the AOL Time Warner deal. In its filing, the NAB asked the FCC to condition the merger on open access requirements that include digital and interactive TV services, instant messaging and electronic program guides.
"The NAB feels compelled to inject industry-wide issues in yet another specific merger review," the NCTA said. "It is inappropriate to decide matters of industry or cross-industry significance, properly considered in general proceedings, in the context of significant merger reviews."
The NCTA further argued that operators do not block content when customers use cable modems to access the Internet.
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