Implications of the AOL-Time Warner Merger :: Television Media TV Essays

Implications of the AOL-Time Warner Merger On January 11, 2001, America Online and Time Warner completed their historic merger shortly after the Federal Communications Commission approved the deal with conditions that affect instant messaging and Net cable access. This one hundred and nine billion dollar merger of America Online and Time Warner is one of the largest deals in corporate history. The deal combines the world's largest Internet Service Provider with the world's largest media company. AOL has about twenty-six million subscribers and also runs instant messaging services and Netscape Netcenter. Time Warner's cable network reaches twenty percent of cable homes in the United States, and also has its own film and music studios, cable and TV broadcasting properties such as HBO and CNN, and publishes Time and People magazines. Steve Case, chairman of the combined company, said that "AOL Time Warner will lead the convergence of the media, entertainment, communications and Internet industries and provide wide ranging, innovative benefits for consumers." Millions of people already take advantage of the brands, services, and technologies that AOL offers, and by integrating these two companies these services will be a part of people's daily lives even more. "The approval of this merger came with three key restrictions beyond those already required by the Federal Trade Commission," said William Kennard, FCC Chairman. The new conditions put on the AOL-Time Warner merger are designed to protect the Internet and its competitiveness. The conditions apply to three specific areas, which include: Internet access over high-speed cable lines, instant messaging via cable lines, and ownership issues between AT&T and Time Warner. The initial concern of the Federal Trade Commission was that the merger of these two powerful companies would deny competitors access to new broadband technology. Therefore, the restrictions enforced by the FTC are to ensure that a full range of content and services by non-affiliated Internet Service Providers is available to subscribers, to prevent discrimination by AOL-Time Warner to other non-affiliated Internet Service providers, to provide a full range of content and services and to lessen competition in the market for broadband Internet Service Provider service. The FTC restrictions state that first AOL-Time Warner must make at least one non-affiliated cable broadband service available on Time Warner's cable systems before AOL itself begins offering its service. Second, AOL-Time Warner cannot interfere with content that it has restricted to deliver to subscribers of its cable