News > Deals
AOL/Warner deal closer
November 6, 2000: 6:31 p.m. ET

Firms nearing an 'open access' deal to open Time Warner's cable lines
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NEW YORK (CNNfn) - Time Warner Inc. and America Online Inc. are nearing a tentative agreement with U.S. antitrust officials that could remove the final regulatory hurdle for the groundbreaking $124.5 billion merger, sources close to the situation told CNNfn Monday.

The companies are close to a tentative agreement to open Time Warner's numerous high-speed cable lines to one or more competitors in each city served by the New York-based media conglomerate, the sources said.

Although the sources said it was still too early to call an agreement a done deal, the Wall Street Journal, which first reported the nearing deal Monday, said a compromise on the so-called "open-access" issue could come as early as this week. Once reached, the deal would be presented to the five-member Federal Trade Commission for a final vote, the paper said.

The U.S. Federal Communications Commission is also reviewing the merger, but most experts expect that agency to follow the FTC's lead.

An FTC spokesman declined to comment on the report. Time Warner spokesman Scott Miller said the company "continues to have productive discussions with the FTC," but wouldn't comment on a possible timetable for reaching an acceptable resolution.

graphicInvestors seemed encouraged by the news on Monday afternoon. AOL (AOL: Research, Estimates) shares climbed $2.43 to $55.86 while Time Warner shares jumped $3.97 to $83.40.

After slumping for months and shaving some 40 percent off the transaction's initial $182 billion valuation, analysts said both stocks have gained some forward momentum in recent weeks on optimism the deal might be reaching a conclusion.

"We are all watching the regulatory process, and there aren't many surprises left out there - the issues are the issues, and I think people are looking for it to all be over," said First Union Securities analyst Scott Davis.

"When it's done, I think it will be a nice sigh of release," he added.

Last hurdle: concerns about high-speed Net access

The merger, first agreed to in January, was approved by European regulators last month after the companies agreed to sever ties with German media conglomerate Bertelsmann AG, and Time Warner (TWX: Research, Estimates) dropped a plan to merge its music interests with those of Britain's EMI Group PLC (EMI). Time Warner is the parent company of CNNfn.

Federal officials have been concerned that the combined company would have a head start in offering high-speed Internet access through the cable lines owned by Time Warner, the second-largest U.S. cable operator. The new company -- to be dubbed AOL Time Warner -- could be forced to carry the service of up to three online competitors, the Journal reported.

The two sides are still at odds over the language of such a settlement, however, including how to apply the principles to the emerging interactive-television market, the newspaper said.

If the discussions fail, the FTC is preparing to bring a lawsuit in federal court to block the merger, the Journal said. FTC officials have already started gathering depositions from rival Internet-access providers to prepare for such a case. Back to top


AOL-Time Warner regulatory review extended two weeks - Oct. 24, 2000

Time Warner 3Q beats Street - Oct. 18, 2000

Influential analyst says AOL-Time Warner deal to close by year's end - Oct. 16, 2000


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