Today’s decision paves the way for the Federal Communications Commission to complete a required review of the merger’s details before the companies can move forward with the $111 billion transaction.
Insiders say while the merger isn’t a done deal yet, AOL and Time Warner are well on their way to finishing the job.
The approval came after both companies pledged to “protect consumer choice” as they move forward with new technology — an attempt to quell fears that the new mega-company could stifle competition in entertainment and in burgeoning fields like the Web and interactive television.
“In the broad sense, our concern was that the merger of these two powerful companies would deny to competitors access to this amazing new broadband technology,” FTC Chairman Robert Pitofsky told reporters.
To comply with the FTC’s requirements, Time Warner made a deal last month to carry Internet service provider EarthLink, one of AOL’s main competitors, over its high-speed cable lines. Under its agreement with the FTC, the combined AOL / Time Warner company must allow customers to choose from among three Internet service providers aside from AOL within three months of offering service in any particular market.
The news made a big splash on Wall Street, where shares of AOL rose $1.80 to $50.25 while Time Warner’s shares rose $2.75 to $75.35 in midday trading on the New York Stock Exchange.
The merger will combine Time Warner’s vast holdings in movie, music, magazine and television production with AOL’s Internet resources. AOL, the nation’s largest Web provider, currently serves 26 million customers.
Among Time Warner’s other major possessions are cable networks HBO and CNN, the Warner Brothers movie and music operations, and Time magazine.
FCC Chairman William Kennard said in an interview early this week the agency hopes to complete its review by year’s end.
“We don’t want to extend this out indefinitely,” he said.
But some insiders say the FCC’s inquiry could last into January, while the agency looks into changes demanded by antitrust officials.