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AOL-Time Warner May Have Made Final Concession to FTC

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From Washington Post

America Online Inc. and Time Warner Inc. have made what they consider their last and best offer to U.S. antitrust enforcers as the two sides near the endgame of their drawn-out negotiations about the companies’ proposed merger, according to sources familiar with the matter.

Dulles, Va.-based AOL and Time Warner of New York have effectively put an end to months of talks, telling the Federal Trade Commission that they will budge no further on concessions to satisfy regulatory concerns, sources said.

The FTC, in turn, has informed the companies that they expect the five-member commission to vote on the $183-billion merger possibly Wednesday, but more likely Thursday, sources said.

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The two sides have pushed back the vote on several other occasions, and they could do so again. But in a discernible shift in the agency’s posture, staffers have all but stopped asking questions of the two companies as they discuss the proposal among themselves, sources said.

FTC, AOL and Time Warner declined to comment.

AOL and Time Warner officials, who announced their deal nearly a year ago, have lost some patience with the government after making what they consider a groundbreaking concession, sources said.

During the negotiations, the FTC asked the companies to agree to allow a rival Internet provider to offer its service over Time Warner’s high-speed cable television network. The FTC wants to maintain consumer choice and fair prices among Internet service providers by ensuring that AOL’s rivals have nondiscriminatory access to Time Warner’s cable system, which covers about 20% of the market.

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Last month, Time Warner produced a deal with Atlanta-based EarthLink Inc., the nation’s second-largest ISP after AOL. The contract includes a “most-favored nation” provision under which AOL and Time Warner are required to offer terms to other ISPs that are at least as favorable as those given to EarthLink, sources said.

AOL and Time Warner entered into the EarthLink deal with great reluctance, but they have drawn the line on another condition that the FTC brought up recently, sources said. The companies have refused to agree to a requirement that Time Warner offer its content, which includes movie and music, to competing ISPs on the same terms as those given to AOL, sources said.

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