Pleading their case

AOL, TW execs defend merger in Senate hearing

NEW YORK — As Hollywood warded off blows from the Senate Commerce Committee, Time Warner topper Gerald Levin and AOL Chairman Steve Case were across the Capitol defending their proposed merger to another group of lawmakers.

A hearing Wednesday for the House Telecommunications Subcommittee was purportedly to listen to the execs’ thoughts on interactive television as their companies prepare to pool a host of content and distribution assets.

Case promised that a combined AOL-Time Warner “will make interactivity and convergence accessible to consumers around the world…in ways that really enrich peoples’ lives.”

But the session was sidetracked by a flurry of other merger-related questions, including the thorny issue of open access.

The execs, naturally, say they object to being forced to open their systems to outside Internet providers as a condition of their deal if no similar restrictions are placed on their rivals.

AOL and Time Warner did pledge in February to keep their cable pipelines open and let consumers choose their preferred Internet providers, but rivals have urged regulators to make that pledge binding to ensure competition.

The Federal Communications Commission is reviewing the combination and is also slated to address the issue of open access soon, but not expected to take action for many months. That could pose a dilemma for regulators, who are expected to rule on the AOL-Time Warner deal in a matter of weeks.

Case and Levin were the only witnesses at the abbreviated hearing, although committee chairman Rep. Bill Tauzin (R-La.) promised a second meeting on Oct. 6, when the deal’s critics would be able to testify as well. Democrats had protested because the session didn’t include competitors or consumer representatives.

Some lawmakers side with Levin and Case on open access, calling it inappropriate for the Federal Trade Commission and FCC to impose on one company conditions that could have wide-ranging implications for an industry.

“I am troubled that the FTC, an agency lacking communications expertise, is considering the adoption of merger-specific conditions affecting only one entity,” commerce committee chairman Tom Bliley said in letters to FTC chairman Robert Pitofsky. He also questioned the authority of the FCC and its chairman William Kennard to impose open access.

Case and Levin told reporters that they’re confident the deal will close as planned sometime this fall. Levin said talks with regulators have been constructive but wouldn’t discuss what conditions might be imposed before a greenlight is issued.

Also Wednesday, European Union officials were meeting behind closed doors to consider the AOL-Time Warner merger as well as Time Warner’s bid to buy U.K. music group EMI. That agreement in particular has run up against resistance from EU officials.

(Reuters contributed to this story.)

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