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Disney to challenge merger
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July 20, 2000: 7:52 p.m. ET
Will urge regulators to force AOL-Time Warner to spin off cable networks
By Staff Writer Kim Khan
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NEW YORK (CNNfn) - Walt Disney Co., concerned about the America Online-Time Warner merger, will urge regulators to split the new company in two since it will control too much media power.
Disney's top lobbyist, Preston Padden, said his company would present a detailed plan to regulators next week, suggesting remedies for what his company sees as a conflict between content and distribution.
Padden outlined one remedy, which will push for a sharp separation of content from distribution. This could result in Time Warner spinning off its cable television networks.
 "Our sole goal is to achieve a world where the consumer has the right to choose or not to choose our content based on how good a job we are doing," Padden told CNNfn.com.
Government regulators, who are expected to approve the merger, have given no signals that they would consider imposing such radical conditions.
Time Warner spokesman Ed Adler said the Disney (DIS: Research, Estimates) proposal was "absurd" and had no further comment.
Padden told CNNfn.com the other remedies included in Disney's report to the Federal Communications Commission would be behavioral. He said those remedies assume regulators will allow the merger of "content and conduit," but the government would pay close attention to how this affects consumers.
He said Disney is yet to receive assurances from AOL or Time Warner that there will be a level playing field regarding content. (431K WAV or 431K AIFF)
The AOL-Time Warner deal, announced in January, has been approved by both companies' shareholders and is under review by the FCC and other agencies. Company officials expect the merger to be completed this fall.
The long-running feud between Disney and Time Warner exploded in May when Time Warner dropped ABC from its cable system during a pricing dispute. Disney has since been on a mission to raise competition questions about the merger, but has stopped short of calling for its break-up.
Time Warner (TWX: Research, Estimates) is the parent of CNNfn. Its shares rose 1-3/8 Thursday to 87. Disney finished up 1-5/8 to 37. AOL, which reported quarterly earnings that beat estimates, fell 3/8 to 59. 
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