More Delays for AOL-Time Warner Deal

WASHINGTON —  America Online Inc. faces further delay in gaining U.S. approval to buy Time Warner Inc. as regulators review access to the combined media and Internet company’s cable television lines and other issues.

Federal Communications Commission staff this week asked a coalition of Internet service providers for language defining local and regional ISPs. The FCC may use the definitions to require AOL-Time Warner to open cable lines to rivals, said W. Scott McCollough, lawyer for the Texas Internet Service Providers Assn.

“We continue to have a concern that there will be a place for us in the Time Warner system,” McCollough said.

The group of Internet providers plans to submit proposed language to the FCC by Monday, said Stephen Heins, director of marketing at Oshkosh, Wis.-based NorthNet. They alerted the FCC to the matter this week.

America Online, which announced the purchase a year ago, had urged regulators to approve the $111-billion combination by the end of last year.

The FCC waited for the Federal Trade Commission to rule on the combination last month before tackling the remaining issues raised by rivals. Negotiations with different industry groups, as well as among the five commissioners, have dragged on, though analysts still expect imminent FCC approval.

A Time Warner spokesman said the review is proceeding smoothly.

“We’re having productive discussions with the FCC,” spokesman Scott Miller said. “As we’ve said, we’re on track to close the merger in the early days of 2001.”

The companies want to package programming from Time Warner’s cable networks and studios with America Online’s Internet services and also develop interactive TV.

Time Warner could give access to local and regional Internet providers with minimal disruption, which would promote competition, Andrew Schwartzman, president of the Media Access Project, told FCC officials this week, documents showed. Schwartzman’s group is a public interest law firm that represents Consumers Union and wants the government to add conditions on AOL-Time Warner.

On another issue, lawyers for Gemstar-TV Guide International Inc. on Thursday wrote to ask the FCC to delay approving the merger until Time Warner agrees to stop anti-competitive actions, such as stripping Gemstar’s electronic program guide from broadcast signals.

It’s not enough for Time Warner to temporarily agree to stop removing the guides during the FCC review; the agency should make that behavior mandatory, wrote Gerald Waldron of law firm Covington & Burling in Washington.

The FCC is the final regulatory hurdle for the two companies.

Shares of Time Warner fell $1.10 to close at $62.60, and America Online fell 89 cents to close at $41.29, both on the New York Stock Exchange.