FCC Tightens Access To AOL-TW Records

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Washington-The Federal Communications Commission is tightening access to records in the aftermath of The Walt Disney Co.'s admission that it violated agency rules by mishandling merger-related records from America Online Inc.

In a limited move, the FCC said last Monday that after Oct. 26, in-house lawyers from any company would no longer have access to confidential merger records submitted by AOL and Time Warner Inc. Outside lawyers could still examine such documents.

The FCC acknowledged that its decision was narrow in scope so that outside lawyers for participants in the FCC's review of the AOL-Time Warner merger other than Disney could retain full access to documents those companies submitted prior to Oct. 27.

"Because of the point we are at in the proceeding, and the fact that AOL and Time Warner have already submitted substantial amounts of information, there are a limited number of documents to which the additional protections will apply," the FCC said.

In addition to limiting further access to outside counsel, the FCC said access would be granted only after parties have "certified that their firm or company has in place procedures to protect against the improper disclosure of confidential information."

But the agency's action won't immediately affect Disney. On Oct. 10, responding to AOL's call for an investigation into Disney's breach, the FCC cut off that company's access to confidential AOL documents.

On Sept. 27, Disney's outside Washington counsel-Verner, Liipfert, Bernhard, McPherson and Hand-told the FCC one of its attorneys violated the agency's confidentiality rules. After reviewing the AOL documents, the lawyer summarized the documents in an e-mail and sent it to Disney's top Washington lobbyist, Preston Padden.

Padden, who was not authorized to see the AOL documents or the derivative e-mail summary, forwarded the message to several Disney business executives who also lacked authority to review AOL records.

AOL lodged its protest with the FCC after learning that Verner, Liipfert had waited five days to notify the FCC of its mistake. During that period, Disney lawyers from a second law firm-Howrey Simon Arnold & White-obtained access to AOL records.

AOL said that if it and the FCC had been notified immediately by Disney, as FCC rules require, it could have asked the agency to block Disney's lawyers from reviewing any additional documents.

Although the e-mail flap has allowed AOL to score some points against Disney-the most vocal critic of the AOL-Time Warner merger-Verner, Liipfert has told the FCC that the Padden e-mail was an innocent mistake and that AOL suffered no commercial harm.

The FCC is continuing to probe the matter and could demand administrative sanctions.

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