FCC compromises in merger

Last Thursday, the Federal Communications Committee gave the green light to the merger of AOL and Time Warner -- with a couple of exceptions. \nThese conditions are tailored to provide open access to competitors on AOL Time Warner's distribution channels.\nThe imposed regulations left both consumer groups and the new company's executives satisfied. Gene Kimmelman, co-director of the Washington Office of Consumers Union told The New York Times, "the combined actions of the FCC and the FTC have transformed a merger that threatened competition into one that could actually expand consumers' choices for high-speed Internet and interactive TV services."\nKathy McKiernan, an AOL spokeswoman, said in a press release, "The conditions on open access are consistent with our memorandum of understanding that we signed last year, and our business model ... we're pleased that they do not affect our current services and they will have no financial impact on the company."\nFederal Regulators and consumer advocacy groups worried that competition for many popular Internet services such as instant messaging, news and music, would dry up if the merger went through. The combined company has more than 30 million Internet subscribers, 150 million instant messenger users and access to 21 percent of the nation's cable subscribers. Opponents to the merger argued the company would only pump proprietary content to its customers.\nNow that the deal has been approved, company executives must integrate the two companies' cultures and operations.\nJohn Malone, CEO of Liberty Media, told USA Today he suspects, "the AOL entrepreneurial culture will eat the Time Warner culture."\nWith high-ranking execs from both companies expected to work together at nearly every senior level, clashes are expected as soon as the company begins integrating its operations.\nNowhere is this more apparent than in the music division. AOL has already made it clear it wants to offer chart-topping singles for free through its Internet service to attract new customers. This flies in the face of Time Warner music execs, whose strategy of selling CDs forces consumers to buy the entire album, even if they only want one or two songs, will be questioned. Bernstein Research analyst Michael Nathanson said, "There's no way you'll drive demand for on-line music at prices similar to brick-and-mortar prices, so you delegitimize the album business."\nWith so many apparent bumps and hurdles with integration of culture and operations, Chairman Case seemed nonchalant when he said, "There's been an unusual degree of community and camaraderie. I think you'll find it'll work remarkably well"