|
AOL-TWX review may see 2001
|
 |
December 28, 2000: 4:48 p.m. ET
Report that FCC scrutiny of blockbuster deal will drag on draws analysts' ire
|
NEW YORK (CNNfn) - With the U.S. Federal Communications Commission review of America Online's $84.7 billion acquisition of Time Warner Inc. apparently poised to drag into the new year, industry analysts lashed out at the federal agency Thursday while conceding the transaction may now close later than expected.
The FCC, which earlier this year said it would rule on the blockbuster merger by Dec. 31, is now not expected to reach a decision until after the first of the year, according to Thursday's Wall Street Journal, which cited FCC staff.
CNNfn, citing a source familiar with the discussions, reported Tuesday that it was very unlikely the federal agency would make an announcement by the end of this week as both companies had hoped.
AOL and Time Warner have both filed papers with the FCC imploring the agency to reach its conclusion by year's end to spare the company from the significant costs of filing more than 10,000 partial-year state and local income tax returns, additional documents with the Securities and Exchange Commission and duplicative audit and accounting reviews.
 But officially, the agency can take at least another 50 days or so to wrap up its deliberations, which center primarily on AOL's Instant Message service, which allows computer users to send instantaneous text messages to each other at no additional cost.
Time Warner spokesman Scott Miller said the companies at this point are sticking to their revised projection that they could close the merger by the end of this year or the first few days of 2001
But some analysts are now wary of that estimation, while others are simply angry at the government for dragging its feet.
"This is emblematic of just how screwed up the FCC is and how they aren't responding to what's happening the market," said Christopher Dixon, a prominent media analyst with UBS Warburg. "They are just failing on their responsibilities."
Officially, the merger has been in front of the FCC for review since March, but the agency stopped its "review clock" in October to await the outcome of AOL and Time Warner's negotiations with the Federal Trade Commission. The commission then restarted the clock earlier this month.
The FCC commissioners received the recommendations on the deal from their staff only two weeks ago, which did not give them enough time to decide whether to allow the deal to proceed in its current form, the Journal said.
Meanwhile, while the regulatory review drags on, AOL's stock continues its steady decline, helping reduce the deal's overall value to just under $85 billion, nearly half of its $164.7 billion initial value.
AOL (AOL: Research, Estimates) and Time Warner (TWX: Research, Estimates), parent of CNNfn.com, received FTC approval in mid-December. The WSJ said the two government agencies had worked closely on the deal already, but the FCC wanted to see the FTC's ruling before making up its own mind.
AOL closed down 50 cents to $35.25 while Time Warner slipped 10 cents to $53.60. 
|
|
|
|
|
|
Time Warner
AOL
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
