Consumer groups blast AOL/Time Warner deal

Content companies also fear monopoly, Mouse may get involved

WASHINGTON — Consumer groups have united to formally demand that the FCC reject the America Online/Time Warner combination unless the merged company agrees to sever all corporate ties to AT&T.

The Consumer Union, Media Access Project and Center for Media Education said the separation could be accomplished if MediaOne, in line for acquisition by AT&T, sells its 25% stake in Time Warner Entertainment; AOL severs ties to DirecTV’s corporate parent General Motors; and Time Warner divests its interest in Road Runner, the nation’s second-largest broadband Internet service provider.

Although the public interest groups refused to name names, they did say that several large content companies have expressed support for their efforts to derail the AOL/Time Warner combo.

Monopoly feared

The public interest advocates said large content companies are already afraid of the merged company’s potential.

As the FCC reviews the merger (which the Federal Trade Commission will also examine), it may weigh input from the Walt Disney Co., among others. Although Disney did not file comments on the deal this week, Disney’s Preston Padden said it may put its position on paper next month when the second round of briefs on the deal is due. “We are increasingly concerned about the merger,” Padden said Tuesday.

Mouse policy may change

If Disney does file official comments about the merger at the FCC, this would be a significant departure from its current strategy, which is to quietly lobby against the deal behind closed doors. Mouse House lobbyists have walked door to door on Capitol Hill in an attempt to raise concerns about the deal with members of Congress.

Padden said his company is concerned about Time Warner/AOL’s ability to create a content bottleneck on the Internet, especially through its control of high-speed Web customers.

In addition, Disney is also battling with Time Warner Cable Systems over the terms and conditions of the carriage of ABC station signals. That dispute could result in several in ABC signals going dark on several Time Warner systems as soon as May 1.

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