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AOL-Time review extended
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October 24, 2000: 2:25 p.m. ET
Companies extend merger review two weeks to resolve antitrust concerns
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NEW YORK (CNNfn) - America Online Inc. and Time Warner Corp. agreed to prolong federal antitrust review of their proposed merger by two additional weeks in hopes of ironing out lingering regulatory concerns about open access to their high-speed cable lines, sources close to the situation said Tuesday.
AOL and Time Warner, the parent company of CNNfn, agreed to extend a pending U.S. Federal Trade Commission review deadline -- originally scheduled for this Friday -- which will give the regulatory agency extra time to decide whether to approve or reject their $109.2 billion union. The extension was voluntary on the companies' part, the sources said.
An FTC spokesman declined to comment on the matter. AOL and Time Warner likewise refused to comment on the extension, but did issue matching statements saying, "We continue to have constructive discussions with the FTC and they are nearing an end. We're on track to close the merger this fall."
The merger has already received a green light from the European Commission and shareholders of both companies. The U.S. Federal Communications Commission must also rule on the merger, but has said it will wait until FTC's judgment before making its decision.
The Wall Street Journal, which first reported the deadline extension on Tuesday, said talks between the companies and antitrust regulators were not stalled, but had become bogged down over how to ensure rival Internet service providers would obtain open access to Time Warner's expansive network of high-speed cable lines.
Sources confirmed that account and noted that prolonging deadlines is a fairly typical part of the review process. The FTC's review process allows for companies to proceed with their merger if the agency permits their mandated deadline to pass without comment, but there have been rumblings of late that the federal agency is threatening to sue to block the merger unless certain mandates are agreed upon.
 The FTC has repeatedly harped on the need for open access, first threatening more than a month ago to block the deal unless certain parameters were agreed upon.
Time Warner and AOL officials, meanwhile, have repeatedly pledged to offer that access, on a voluntary basis. In August, Time Warner, the No. 2 U.S. cable concern, unveiled an agreement giving Juno Online Services Inc. access to its broadband network, which includes 12.6 million customers worldwide and another 11.5 million homes -- that already have cables running along their streets -- which are potential high-speed access customers.
However, consumer advocates and such competitors as Walt Disney Co. ( DIS: Research, Estimates) -- fearful that AOL Time Warner would give preference to its own content following their merger -- are still advocating for a legally binding mandate that would require Time Warner to open its line to any Internet service provider that asks -- language that would surely make the companies balk.
Tuesday's Journal article said AOL has been resisting language that would force it to deal with competing ISPs on equal terms. Instead, the company believes it should be allowed to structure commercial contracts based on such factors as bandwidth use and traffic volume, the Journal said.
Still, industry analysts and investors have expressed renewed hope in recent days that the merger process is reaching fruition. After slumping for months and dragging the deal's initial valuation down some 40 percent, both Time Warner and AOL shares have rebounded of late as influential analysts, such as Merrill Lynch's Henry Blodget, have predicted a successful conclusion.
Meanwhile, America Online (AOL: Research, Estimates) CEO Steve Case and his Time Warner (TWX: Research, Estimates) counterpart Gerald Levin assured investors last week that the merger was on schedule to be completed this year.
Investor optimism continued Tuesday as AOL shares climbed $1.43 to $49.37 in early afternoon trading Tuesday while Time Warner gained $1.79 to $74.80. 
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