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CNN Today

Federal Trade Commission Approves AOL-Time Warner Merger

Aired December 14, 2000 - 1:21 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: The Federal Trade Commission has given its blessing to a huge media merger: America Online and Time Warner. Today's announcement brings America's largest Internet service provider much closer to a combination with the parent company of CNN, "Time" magazine, Warner Brothers and, as you know, many other media operations.

Greg Clarkin of CNN financial news is in Washington following, closely, the story today, and fills in the blanks -- Greg.

GREG CLARKIN, CNN CORRESPONDENT: Hi there, Lou.

This was, indeed, a very big regulatory hurdle for the two companies to get past; but this morning the FTC unanimously -- five to nothing was the vote -- approving the merger between America Online and Time Warner. Time Warner, parent of CNN.

Now there were a couple of very big hurdles that had to be overcome at the last minute. These centered, really, on both content and the open access of the cable lines that Time Warner owns, which eventually will be pumping high-speed Internet services into consumers' homes.

Now, a lot of opposition to this deal; a lot of opponents were concerned that, once this deal got done that AOL would have, really, the dominant -- would be the dominant presence on those high-speed Internet access lines. Well, the FTC took great steps to ensure that AOL doesn't really gain too much of foothold; at the same time, allowing some of the competitors, such as EarthLink, access to those lines. So once those concerns were satisfied, a lot of commissioners tell us that, basically, that cleared the way for approval of this deal.

Now, there are also some concerns about content -- that content that didn't fall underneath the AOL-Time Warner umbrella might not be given favorable terms to high-speed Internet consumers. But under the terms of this consent decree that was accepted by the Federal Trade Commission today, that content apparently will be given equal access, even if it is not AOL-Time Warner content.

So, again, the vote was five-nothing; it was unanimous. Chairman of the FTC, Robert Pitofsky, is scheduled to hold a press conference in a matter of moments where he's going to outline even some more specifics as to these issues. Lou, back to you in Atlanta.

WATERS: Is this considered a done deal, then, or not?

CLARKIN: Lou, from here it has to go over to the Federal Communications Commission -- the FCC. They have some concerns over instant messaging which is really a new field and new business; and America Online dominates that. But it is widely expected that the FCC will grant approval for this deal, and the companies are optimistic that they could get this thing closed and finalized once and for all sometime in the early weeks of the new year.

WATERS: All right, Greg Clarkin in Washington -- Natalie.

NATALIE ALLEN, CNN ANCHOR: Well, Elizabeth Wasserman is Washington bureau chief for "The Industry Standard," which covers the Internet economy. She joins us to share her take on this AOL-Time Warner merger.

Ms. Wasserman, thank you for joining us.

ELIZABETH WASSERMAN, WASHINGTON BUREAU CHIEF, "THE INDUSTRY STANDARD": Thank you.

ALLEN: So we've just seen the biggest media merger about to take place -- just the FCC has to sign on to it. If I'm at home and I'm watching cable and I have a computer, what does this mean to me, really?

WASSERMAN: Well, this means that in the future you may be able to access both types of services over your TV. There's a lot of talk in this merger about interactive TV; and what that means is not only being able to e-mail friends or instant message friends while you're watching your favorite programs, but also to click here when you see an item that you like from a commercial that you'd like to buy.

So there's a lot of potential in this for viewers. Right now you can do some of that, but you basically have to have your television set beside your computer. They're talking about a future in which these devices are merged.

ALLEN: How long before, you know, our kids can't believe that the Internet and the TV used to be all separated?

WASSERMAN: Yes, it's quite revolutionary. You know, people have been waiting for this to roll out. I think, when this merger gets finalized, we're going to see it deployed in -- with all seriousness.

ALLEN: What about the fact that there's another super-gigantic company out there now with this media merger? Any concerns about that? I know there were concerns as far as other businesses and the competition being able to be allowed in.

WASSERMAN: You know, there are tremendous -- there are big winners and losers as a result of this deal. You know, among the winners, the FTC is going to have a hand in, you know, shaping the Internet of the future. A big Internet service provider such as EarthLink, which has already brokered an agreement with Time Warner, I think, would be a winner.

There are also losers. Content companies were looking for more reassurance that they would not face discrimination on Time Warner cable systems. They got a pledge and there's a reporting back to the FTC if they have complaints provision, but they were looking for a little more. However, I do think that, in the future as long as Disney, Viacom, et cetera are providing great programming, you know, such as "Survivor" or "Sex in the City" or something that their not going to -- that there's going to be demand for those -- that content on cable systems.

ALLEN: So, as far as the programming go, does this have anything to do with the fact that they'll up the ante -- we'll see even better and better and more high-quality programs?

WASSERMAN: Hopefully; that remains to be seen.

There's a lot of talk, there's a lot of potential about what interactive TV could mean. At the same time, there's concern and, again, I'd list among the losers consumer groups that are concerned about media consolidation and about, you know, they regard the Internet as sort of a pristine forest and fear that this is going to result in the commercialization of -- the further commercialization of the Internet.

ALLEN: Come down to the God-awful level of the cable TV -- that's us.

Elizabeth Wasserman, we thank you so much. We hope it's all a good thing for everybody, of course...

WASSERMAN: Thank you.

ALLEN: ... especially since we work here.

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