AOL-TW’S INTERACTIVITY RAISES FEDERAL EYEBROWS
Critics fear that combining AOL's already dominant Net presence with Time Warner's influential cable TV presence would create—as European regulators once cited—a "walled garden" of its own interactive commerce.
"This [would be] the first merger of TV and the Internet," said former FCC Chief of Staff Blair "Be Home By" Levin, now a lobbyist for iCAST. "It gives AOL all kinds of incentives to continue the wall around the marketplace. We want to make sure that marketplace is opened up."
Because the two companies are in different businesses, AOL and Time Warner contend their deal is not anti-competitive. Which is kind of funny for them to say when you consider that "interactive TV" is, basically, the combination of two technologies: the Internet and television. Hmmm, what two companies might best be poised to take advantage of that? We mean, beside AOL and TW.
Currently, interactive TV has less than 1% of the market, but analysts see dynamic growth for the technology. Forrester Research predicts interactive TV in 24 million U.S. homes by 2004, with revenue totaling $20 billion a year.
With an eye toward that potential revenue, AOL and Time Warner have told federal regulators that while they are willing to compromise on opening up instant messaging and high-speed Internet access, interactive TV is nonnegotiable. The companies claim the nascent technology is too young to impose restrictions upon.
The threat of an AOLTW-dominated future has caused Walt Disney Co. and NBC—as well as some software companies and consumer groups—to raise concerns.
Just as a side note, both Disney and NBC have had less than spectacular forays into the Web world. Disney's Go Network performed far below expectations and was retooled (hitsdailydouble, 9/15)—not to mention losing a copyright infringement suit over the logo (hitsdailydouble, 5/26). And, according to a CNET story yesterday (10/19), Edmond Sanctis, the president of NBC Internet, is expected to resign from his post, cued in part by NBCi's struggling stock price.
But that probably doesn't have anything to do with their concerns about AOLTW's interactive potential. Nah.
AOL-TW execs still believe the merger will be approved this fall, but according to sources close to the case, the Federal Trade Commission (which is also reviewing the deal) is expected to continue with its investigation at least into November.
