FTC Defers Merger Decision

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WASHINGTON -Taking a public stand for the first time, the Federal Trade Commission is all but promising to block the America Online Inc.-Time Warner Inc. merger unless the two companies agree to various open-access and content conditions, an informed source said last week.

The five FTC members met in closed session last week to review merger terms, but decided last Thursday afternoon to give AOL and Time Warner until the end of the month to negotiate a settlement.

"The parties have committed in the last 24 hours to offer new proposals to address competitive issues in connection with the proposed merger. The commission has elected to delay action for a period of not more than three weeks," the FTC said.

The FTC's announcement appeared on the agency's Web site after chairman Robert Pitofsky convened a closed-doors meeting to "consider an enforcement action against the proposed merger of AOL and Time Warner."

The FTC said it won't approve the deal until AOL and Time Warner sign a contract with at least one competing national Internet-service provider. The FTC also wants the companies to postpone the launch of a high-speed version of AOL on Time Warner cable systems until after the launch of a competitor, the source said.

Last week,
The Wall Street Journal

reported the FCC was insisting on a prohibition on exclusive contracts between Time Warner Cable and AT&T Corp., the nation's largest cable-system owner with 16 million subscribers.

But the source said the proposed exclusivity prohibition would extend to interactive television deals not only between Time Warner and AT&T, but also between Time Warner and any cable-system operator.

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