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FTC mulling AOL/TWX suit?
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September 21, 2000: 6:59 p.m. ET
Federal agency seeking sworn testimony from firms opposed to the deal
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NEW YORK (CNNfn) - The U.S. Federal Trade Commission is seeking sworn testimony from at least one company opposed to the AOL/Time Warner Inc. merger, CNNfn has learned, a move that could suggest a lawsuit designed to halt the $121.8 billion union.
An executive who has voiced concerns about the media marriage was contacted by the FTC, asked to fill out an affidavit and is doing so, the executive told CNNfn. The Financial Times also reported Thursday that several other executives opposing the union were asked to fill out similar affidavits, perhaps signaling that the federal antitrust agency is seeking more serious changes to the merger than originally expected.
A source familiar with the investigation says no decision has been made about undertaking a lawsuit to oppose the merger, but preparations are under way.
An FTC spokeswoman declined to comment on the requests, as did an AOL spokeswoman. A Time Warner spokesman said conversations with the FTC were proceeding well.
"We are confident we will successfully address any issues that have been raised and are on track to close in fall," the spokesman said.
Antitrust experts cautioned the request for sworn testimony is hardly unique during the merger review process and does not mean the FTC has made a final decision, the Financial Times said. However, the experts did call the move "rare" and said it appears the FTC is preparing for a possible showdown in federal court.
The report comes as another federal agency reviewing the proposed merger, the Federal Communications Commission, moved to debunk a report in Thursday's Washington Post indicating FCC officials had drafted a document giving the green light to the mega-merger provided that the companies agree to open their cable TV systems to rivals.
A FCC spokesman said the agency's staff was engaged in ongoing analysis of the AOL's agreement to acquire Time Warner (TWX: Research, Estimates), the parent company of CNNfn, but had made "no recommendations to the full commission on the matter" at this time.
The spokesman said, "Any media stories about potential staff recommendations or draft reports can only be based on incomplete and speculative analysis and do not accurately reflect the decision-making process of the FCC."
The Post said it obtained a draft document indicating the media marriage would win approval from the regulatory agency as long as both parties make legally binding their promise to let rival providers of high-speed Internet access reach AOL/Time Warner cable customers.
 Although the draft provides some insight into FCC thinking, the commission could still block the deal if both companies do not make major concessions in order to prevent any illusion of monopolistic practices, the report said.
The newspaper, quoting unidentified sources, also said the draft was an "early snapshot" and that the agency's review was not complete. The FCC is scheduled to wrap up its review of the merger within the next 30 days.
High-speed Internet access via cable is becoming more popular with U.S. consumers, and Time Warner has teamed with AT&T Corp. (T: Research, Estimates) in a cable partnership while AOL (AOL: Research, Estimates) is the world's biggest Internet service provider.
The merger of AOL and Time Warner would create a huge "duopoly" in the market for Internet access via cable, and so has drawn the FCC's close scrutiny, the report said.
The FTC may also consider forcing Time Warner to sell its cable assets, which are about 20 percent of the U.S. market, as a condition to its merger, a telecom executive said. However, it is not believed that Gerald Levin, Time Warner's chief executive, would spin off the outlets to win approval, the Financial Times said.
AOL shares lost 6 cents to close at $54.88 Thursday, while Time Warner gained $2.22 to $80.88. 
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