AOL-Time Warner Approved by FTC

W A S H I N G T O N, Dec. 14 -- The Federal Trade Commission today unanimously approved the merger between America Online and Time Warner — the largest in U.S. history — after extracting last-minute pledges from the companies aimed at protecting consumer choice for the next generation of Internetservices and content.

Approval for the $111 billion deal came after AOL and Time Warner made a last-minute offer to increase competitors’ use of cable lines and log complaints from rivals about obtaining Time Warner content.

The deal still has to pass the Federal Communications Commission, but any objections they might have would be mucheasier to surmount, making FTC approval tantamount to a full check-off, some say.

“The body language, if there can be such from the FCC, seems to have been pretty favorable, in that this transaction heads the media business toward the next leg of evolution,” said Lanny Baker of Salomon Smith Barney. “We’re a hurdle away from the end of the race.”

Consent Decree Addresses Issues

The commission voted 5-0 to endorse the deal, even though approval was in question earlier this week, with some members expressing concerns about the union’s impacton consumers.

The commission accepted a consent decree that addresses a range ofanti-competitive effects of the deal. They include safeguards toprevent the company from shutting out other Internet providers fromits high-speed service, also known as “broadband,” and fromdiscriminating against the content of other companies deliveredover its Internet or interactive television service.

“We believe that this order negotiated in good faith by these parties should prevent foreclosing of access and open the door to this extraordinary new technology,” said FTC Chairman Robert Pitofsky.

Under its agreement with the FTC, the combined company must offer at least three Internet providers, in addition to AOL, within three months of offeringservice in a market.