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AOL decision draws near
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November 8, 2000: 6:10 p.m. ET
FTC could rule on AOL Time Warner union Thursday, but delays still possible
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NEW YORK (CNNfn) - The fate of America Online Inc.'s $125.3 billion blockbuster acquisition of Time Warner could come to a head as early as Thursday, even as reports surface that U.S. antitrust regulators are demanding new, last-minute concessions from the would-be union.
The U.S. Federal Trade Commission has scheduled a closed-door meeting Thursday to discuss various merger proposals. However, the agency is not commenting at this point as to whether the AOL/Time Warner proposal is on the agenda.
The five-member FTC is currently facing a November 10 deadline to vote up or down on the proposed marriage, which would create an unparalleled Internet and media titan. However, the federal agency could also postpone that deadline for another two weeks if it believes constructive negotiations with the two companies are still possible, as it did two weeks ago.
The merger has already received the blessing of the European Commission, but still must receive approval from the FTC and the U.S. Federal Communications Commission. The FCC has delayed its decision until after the FTC makes it's ruling, but is widely expected to follow the FTC's lead.
But even as regulators and company officials continued their game of chess in Washington, D.C., Wall Street analysts remained bullish on the merger Wednesday and predicted the end of the regulatory review process was near.
Last-minute demands?
The FTC, AOL and Time Warner all declined to comment Wednesday on a report in the Wall Street Journal indicating FTC officials were demanding last-minute concessions that would require Time Warner to open its high speed cable lines to competing Internet service providers before AOL could offer similar service over the same lines. The Journal quoted people familiar with the deliberations.
"We are having productive conversations with the FCC," said a Time Warner spokesman, who declined to elaborate further.
 The FTC is considering going to court to block the deal unless the companies agree to those concessions, the Journal said. Specifically, antitrust officials are concerned that AOL, the biggest Internet access provider in the United States, will get a leg-up on competitors by offering high-speed Net services in the cities served by Time Warner's cable networks.
As part of a draft settlement, the companies have agreed to open up Time Warner's cable lines to at least three competitors within 90 days of offering AOL service via the network, the paper said. Time Warner, the parent company of CNNfn.com, has already reached an agreement to open up its cable lines to one ISP, Juno Online Services Inc., but the two sides have not agreed on terms of the deal.
The FTC has also asked that Time Warner end its exclusive pact to provide its cable lines to high-speed access provider Road Runner, the paper said, adding that the companies have agreed to such a condition. Time Warner is a part owner of Road Runner.
Analysts remain upbeat
Still, the potential roadblock did little to dampen enthusiasm for the merger Wednesday.
Goldman Sachs analysts Michael Parekh and Richard Simon issued a bullish research note Wednesday morning saying they believed the two companies would ultimately reach an agreement on open access to the cable lines and gain regulatory approval for the deal.
The analysts conceded the companies would likely be forced to open Time Warner's extensive cable lines, but said that such an agreement could ultimately benefit the future AOL Time Warner.
Specifically, the analysts said the company could likely charge between $30 and $35 a month as a flat access fee per customer or take a percentage of the third-party ISP's month subscriber charge and still leave room for the ISPs to generate solid revenue and profits from the arrangement.
 AOL Time Warner would also likely get a portion of the ISPs' advertising and electronic commerce revenues, they said. Either way, they predicted it would still be less costly than continuing to operate Road Runner.
Late Tuesday, SG Cowen analyst Scott Reamer reiterated his "Strong Buy" rating on AOL, noting the broadband discussions had little to do with the deal's overall logic.
"We still believe that the Street is underestimating the value of AOL's two most important corporate assets: It's pre-eminent online brand and its massive subscriber base," he said.
Shares of AOL (AOL: Research, Estimates) fell $1.31 to close at $56.30 Wednesday while Time Warner (TWX: Research, Estimates) shed $2.22 to $83.20 on the New York Stock Exchange. 
-- from staff and wire reports. CNNfn.com's London bureau contributed to this report.
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