Merger Questions Remain

Two members of the Federal Trade Commission are on opposite sides about whether America Online Inc.’s proposed purchase of Time Warner Inc. will hurt competition, persons close to the deal said. At issue is the agreement for EarthLink Network Inc. to use Time Warner’s cable lines next year to offer consumers an alternative Internet service, a deal that was widely seen as clearing a big hurdle to win FTC approval. Commissioner Orson Swindle, a Republican appointee, said the deal demonstrates that AOL and Time Warner are willing to open cable systems and that therefore the deal should be permitted, the sources said. Commissioner Mozelle Thompson, a Democratic appointee, said the EarthLink deal is not enough to guarantee any competitive access by rivals and opposes the deal, they said. On the NYSE, shares of Dulles, Va.-based AOL fell $2.75 to close at $40.61, and Time Warner fell $2.40 to close at $62.