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FTC Approves Merger of AOL and Time WarnerAired December 14, 2000 - 2:00 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NATALIE ALLEN, CNN ANCHOR: The Federal Trade Commission has approved the mega-merger of AOL and Time Warner, parent company of CNN. The FTC voted unanimously to OK the deal today. The vote follows nearly a year of negotiations between the companies and government regulators. The merger is the largest in U.S. corporate history and is valued at $111 billion. Announced in January, the deal approved today still requires approval by the Federal Communications Commission.
LOU WATERS, CNN ANCHOR: During negotiations with AOL and Time Warner, the government expressed concerns the merger could limit competition. Major consumer groups agreed, including the Consumer Federation of America. Mark Cooper is director of research at that federation. He joins us now from Washington.
Mr. Cooper, about an hour ago, Elizabeth Wasserman with the "Industry Standard" listed winners and losers in this deal. Among the losers: CFA. Do you feel like a loser today?
MARK COOPER, CONSUMER FED. OF AMERICA: No, we made a significant step forward here in ensuring that the next generation of the Internet will be open. Chairman Pitofsky pointed out, they have required at least three Internet service providers who are not affiliated with Time Warner-AOL to have access to the public. He has required arm's- length negotiations for an unlimited number of other Internet service providers.
So that's an important step forward. But people are going to have to fight their way onto this network. He has an agency that has a complaint process. There will be enforcement. But this is only part of the process as we move forward. Of course, we also have to get open access for the rest of the industry. But this is significant progress from our point of view. If we hadn't done this, Time Warner- AOL would have had one and only one ISP, Internet service provider, available that would have been the one they own.
And so this is good progress for us.
WATERS: So tell me what that means to me and other consumers of Internet services and cable television and the like. How does this influence or impact my life in any way?
COOPER: Well, it means that, when their system -- when the merger closes, you will have a choice of at least three, six, maybe 10, as many as 20 Internet service providers. If you don't like the kind of content and the way AOL treats you, you will have choices for your cable-modem service. If the FTC had not taken their action today, you would have had to choose either Time Warner-AOL or no Internet service provider on that cable network.
So this gave you real choice. And if we work hard, and we go to the FCC, we could get true open access, which means you could choose from one of hundreds of ISPs.
WATERS: So, on down the line, what you are saying is, there are roadblocks because of issues that were not addressed?
COOPER: Oh, absolutely. As the chairman pointed out, people will have to negotiate their way onto Time Warner systems. They have to be fair negotiation. Time Warner will say -- could say there are technical limitations. They will have to prove that those limitation exist. And in a certain sense, this kind of process, where there is arm's-length negotiation with an arbiter available -- the FTC -- is the way a new industry has to develop.
We have to get the idea what the parameters for competition will be. And the chairman was very much aware of the fact that it is a new industry. It's important to have basic principles like nondiscrimination, like fair access to content. Those are good principles. We have to work out the detail. And he set up a process, from his point of view, that will help us get there. The Federal Communications Commission has to make sure this works, not only on Time Warner, but also in the rest of the industry.
WATERS: You said it: It's a new industry. It had to happen. Somebody had to do this. You must see some upside to all of this. What might the positives be?
COOPER: Well, the three positives we see are: a process for negotiation access for Internet service providers; a process for ensuring that interactive television programming -- the two-way television programing that everyone thinks will be a big market -- that they cannot discriminate against non-Time Warner content; and access to other types of content. So all three issues outstanding on the supply side of this industry have been addressed by the commission in an open-ended way.
This is the start and a continuation of a long struggle. It is certainly not the end.
WATERS: All right, Mark Cooper, thanks so much, director of research at the Consumer Federation of America.
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