WASHINGTON — The Federal Trade Commission has nixed a request by Liberty Media topper John Malone to up the company’s stake in AOL Time Warner and lift restrictions on his shareholder voting rights.
In an unanimous vote, the FTC said there was no reason to relax conditions imposed on the 1996 merger of Time Warner and Turner Broadcasting.
Back then, Malone ran Liberty’s then-parent Tele-Communications — a large cable-systems operator that’s since been folded into AT&T — and TCI was an investor in Turner Broadcasting.
Worried that TCI would become too closely allied with cable systems operated by Time Warner, the FTC demanded that Liberty enter into a consent decree limiting Malone’s shareholder voting rights and capping his stake in TW at under 10%.
In asking federal regulators to ease those limits, Liberty argued that, as it now owns no U.S. cable systems, there’s no chance for a conflict of interest. Liberty was spun off from TCI last year.
But the FTC didn’t buy the argument, saying Liberty never mentioned whether it intended to stay out of the cable systems biz.
“Your petition has provided no basis for concluding that similar ties between Liberty and other cable systems would not produce this same distortion of incentives — with the same effects on competition in the cable programming market — if Liberty were allowed to own more stock in Time Warner,” the FTC said in its ruling, released late Friday.
Liberty has a 4% stake in AOL Time Warner, and through Liberty, Malone is already one of the biggest individual shareholders in AOL TW. His request to regulators had prompted speculation he’d like to acquire even more stock in the media giant — and maybe even a seat on the conglom’s board.
Malone has denied wanting a board seat.