Opponents of America Online Inc.’s acquisition of Time Warner Inc. are mobilizing in a last-ditch attempt to persuade antitrust enforcers to attach tough conditions to the deal–or, failing that, to kill it.
The Federal Trade Commission is slated to vote on the $183 billion takeover on Thursday, and sources have said at least three of the five commissioners are prepared to approve the merger.
Opponents are moving quickly to get in a final word in anticipation of action by the antitrust agency. The American Civil Liberties Union said it is set to meet with commissioners on Wednesday. Small and mid-size Internet service providers from Florida to Wisconsin are contacting commissioners by telephone, e-mail and letter, and some representatives may come to Washington to meet with them this week. Some consumer groups said they have appointments with commissioners today.
Meanwhile, FTC staffers recently invited AOL nemesis Microsoft Corp. to weigh in on the merger, sources said. Microsoft officials, who have repeatedly raised concerns about the deal, declined to confirm or deny that they will speak to the antitrust agency again this week. “We’ve had a dialogue with the [FTC] staff,” said a Microsoft spokesman.
Dulles-based AOL and Time Warner of New York have made what they consider generous concessions to the FTC–including an agreement with a rival Internet provider to offer its service over Time Warner’s cable lines. And they have told the agency they will go no further, sources have said. AOL spokeswoman Kathy McKiernan declined to comment.
But opponents say that the companies have not gone far enough, and they fear that the merger will create a media giant that could restrict consumer choice and control what content consumers read in publications, watch on television and view on the Internet.
“This is a very important free speech issue,” said Barry Steinhardt, associate director of the ACLU in New York. He said the ACLU would want the FTC to block the merger “if they’re not prepared to create an atmosphere and environment where free speech will flourish.”
The ACLU wants the FTC to broker a strong, enforceable “open access” provision that will allow many competing Internet providers to offer service over Time Warner’s high-speed cable lines. Trying to draft such a condition has been one of the chief challenges facing FTC commissioners.
Last month, in an attempt to appease regulators, Time Warner produced a deal with Atlanta-based EarthLink Inc., which is second only to AOL among the nation’s largest Internet providers. The contract calls for EarthLink to share its revenue from subscriptions and e-commerce transactions, sources have said.
Other Internet providers are clamoring to see the confidential EarthLink contract, which they fear may include terms that are not as favorable to smaller players who have less revenue to share with AOL Time Warner.
Without access on fair business terms, “we will certainly haul out all of the voices and in a choir we will sing directly to the FTC that they should take this deal to court,” said Stephen Heins, marketing director of NorthNet LLC, a small Internet provider in Oshkosh, Wis.
Other Internet providers fear that AOL Time Warner would restrict their access to content and to set-top boxes, which are used to deliver interactive television.
“We’re hoping the FTC does the right thing,” said Joe Marion, executive director of the Federation of Internet Solution Providers of the Americas, which represents firms in Florida and other parts of the Southeast.