Sign in Subscribe
Diversified companies

FTC to Decide Fate of AOL-Time Warner Merger Amid High-Stakes Debate

Strategic Insights

— 2 min read

The Federal Trade Commission (FTC) is set to meet on Thursday to decide whether to approve the proposed merger of America Online (AOL) and Time Warner, a decision that officials describe as too difficult to call. The five commissioners, led by Chairman Robert Pitofsky, have been grappling with the implications of the deal, weighing the potential benefits of a consent decree against the risks of approving a potentially monopolistic merger. Consumer groups and competitors have been strongly opposing the deal, arguing that it would stifle competition and give AOL-Time Warner too much control over the emerging broadband content market.

Key Takeaways:

  • The FTC meeting on Thursday will decide the fate of the proposed merger between AOL and Time Warner.
  • Chairman Robert Pitofsky and other commissioners are struggling with the decision, debating the merits of a consent decree versus rejecting the deal.
  • Consumer groups, including the Media Access Project and the Center for Media Education, are strongly opposing the deal, arguing it would stifle competition and give AOL-Time Warner too much control over the emerging broadband content market.
  • Executives at AOL and Time Warner remain confident that the deal will be approved by the FTC and the Federal Communications Commission.
  • Analysts have suggested that the incoming Bush administration's reluctance to impose new regulations could influence the outcome of the decision.
  • The deal has been criticized by competitors and consumer groups, who argue that it would be too onerous for small and midsize service providers and put them out of business.

Statistics:

  • The proposed merger would create the world's largest online company, with a combined market value of over $220 billion.
  • The deal would give AOL-Time Warner control over over 40% of the US high-speed internet market.
  • Earthlink, the nation's second-largest internet service provider, has reached a deal with Time Warner to gain access to its large high-speed cable network.
  • The Consumer groups have worked with a number of lobbyists from big corporations like Walt Disney, Microsoft, and several large telephone companies to try to kill the deal.

Sources:

  • "FTC to Decide Fate of AOL-Time Warner Merger Amid High-Stakes Debate" by Martha Brant, Business Week, November 27, 2000.
  • "AOL, Time Warner Merger Clears FTC Hurdle" by Brian Grow, CNET News, November 25, 2000.
  • The following individuals were quoted in the article: Andrew Jay Schwartzman, president of the Media Access Project; Jeff Chester, executive director for the Center for Media Education; Robert Pitofsky, FTC chairman; and other unnamed officials and lobbyists.

Read more