CURRENT EVENTS UPDATE

By FRANK GIBNEY JR.

Steve Case and Jerry Levin are so confident in the future of AOL Time Warner that they just aren’t going to let powerful competitors, wary consumers or, especially, the Federal Government stop them. That’s why for more than six months they directed their top executives to endure hundreds of hours of interrogation in Room No. 385 of the Federal Trade Commission building in Washington, and why they showered thousands of proprietary documents on their inquisitors. And it’s exactly why they faxed, on the eve of last week’s FTC vote, the final written concession that led to unanimous approval of the $112 billion marriage between Case’s America Online and Levin’s Time Warner.

The combination will be, for better or worse, the world’s biggest media conglomerate. (Of which TIME will be a part.) It’s a vast empire of broadcasting, music, movies and publishing assets, complemented by AOL’s dominant Internet presence, all fed to consumers, ultimately, through Time Warner’s cable network. Think of it as AOL Time Warner Anywhere, Anytime, Anyhow.

In the world of the near future, all manner of content—magazines, movies, music, books, shopping—will be pouring into your home through your cable television line. The cable is now known as broadband because, even though it looks the same, technology has made it fatter and faster. When broadband access fuses the new and old economies with a bang, consumers will have a simple concern: If the broadband world is ruled by one company, will we have to pay more? Will we have a choice of what we watch? And if we don’t stop them now, will we be able to later?

Nobody knows. And that put the FTC in the ungainly position of regulating the future. The ftc’s solution was to ensure that the pipes, just like federal highways, were open to everyone, making "open access" to the two companies’ cable and Internet services the price of approval. Case and Levin agreed to allow at least three other Internet service providers access to Time Warner cable lines and decreed that AOL would continue to invest in slower, phone-based DSL service.

In a staff memo just days after the merger was announced, Case and Levin asserted that the new company would "fundamentally change the way people communicate." That’s a tall order. And as Case and Levin would be the first to suggest, there’s no room for failure.

—TIME, December 25, 2000–January 1, 2001

Questions
1. What conditions did the FTC put on the merger between AOL and Time Warner?

2. What services will the new company offer?

TIME CLASSROOM