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Thursday, 27 April, 2000, 08:16 GMT 09:16 UK
AOL-Time Warner merger opposed
Aol and Time Warner
The giant merger is worrying consumer groups
The proposed merger of America Online and Time Warner is not in the public interest, claim US consumer groups.

The giant merger, unveiled in January, brings together America's dominant internet service provider with one of the world's largest entertainment groups.

AOL/Time Warner Special Report

The combination includes brands like CNN, Netscape, Warner Bros, CompuServe and Time Magazine as well as considerable cable networks.

But that link-up would limit "diversity and program choices" in video and on the internet, according to a petition seeking to block the deal unless substantial changes are made.

The document was filed with America's Federal Communications Commission by the Consumer Federation of America, Consumers Union, Media Access Project and the Center for Media Education.

'Higher prices, less choice'

The media merger would create "a complex web of cable and internet properties that would be in a position to thwart competition in many markets across the country," said the Consumers Union's Gene Kimmelman.

"This merger links AOL with AT&T, making them the two largest cable companies in the United States, controlling over half of America's cable lines and nearly half of the most-watched channels on cable TV."

Left unchecked, it would result in "horizontal and vertical power that creates such market dominance to be able to restrict choices for consumers, free expression among citizens and raise prices."

Mark Cooper of the Consumer Federation said that before the deal was announced, AOL had claimed that the cable industry had a "stranglehold" on the emerging field of high-speed internet connections, and that cable firms should allow their wires to be used by competitors.

But he claimed AOL had recently failed to guarantee open access.

"That is why we're asking the FCC to impose AOL's own (proposed) non-discrimination rules on AOL's cable affiliates," he said.

Sell-offs demanded

The groups are also calling for the merger to be blocked unless there are a series of sales.

It calls for AOL to sell its interest in satellite television provider DirecTV's ultimate parent, General Motors. It also wants Time Warner to sell Time Warner Entertainment's interest in internet service provider Road Runner.

AT&T should sell the stakes it holds directly and indirectly in Time Warner while MediaOne, in the process of merging with AT&T, should sell its interests in Time Warner Entertainment.

At the time of the announcement, the transaction was estimated to be worth some $155bn based on stock prices at the time.

Echoes of Microsoft

The response was filed on Wednesday, the FCC's deadline for public comment on the merger plan.

The whole issue of monopoly power is a hot topic at the moment given the recent ruling that software firm Microsoft had broken US monopoly laws.

Mr Kimmelman told a news conference: "Our greatest fear is that we could end up with litigation like the Microsoft litigation."

He said he saw "all the makings, all the trappings here, of the very same set of circumstances developing over the next decade" in the area of broadband internet services.

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10 Jan 00 | Business
The AOL - Time Warner merger
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