The US Federal Communications Commission has given conditional final approval to the merger of America Online and Time Warner, which will create the world's biggest media entertainment group.
The approval came after weeks of negotiations. But the Commission warned that, 'This link between these two giant companies, the number one and the number two cable operators in the country, raises some competitive concerns.'
The Federal Trade Commission gave its approval to the merger last month, leaving the FCC as the last regulatory agency to review the case.
The transaction, worth $155 billion at the time of the announcement, is now estimated at $127 billion based on current stock prices. It was approved last year by European regulators.
The FCC examined concerns over the future of the instant messaging system, which AOL/Time Warner is likely to dominate, as well as competing broad-band Internet service providers' (ISPs) ability to access Time Warner's cable systems. It also took a hard look at the issue of interactive television but decided 'not to impose specific conditions involving interactive television.'
The Commission warned, however, that, 'The potential for discrimination in the interactive television marketplace bears watching and we have begun a proceeding to explore the need for the FCC's involvement in promoting competition in this developing service.'
Under terms for the approval, AT& T, which has a 25% share in Time Warner, must divest itself of its interests in Time Warner Entertainment, the FCC ruled. AT&T Corp and AOL/Time Warner are also prohibited from entering into any agreement under which any AOL/Time Warner ISPs would have exclusive high-speed Internet access to any AT&T cable system.
The deal had raised numerous objections from critics who claimed a merged AOL Time Warner would have too much control over Internet and cable television as well as the content delivered over the networks.
