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AOL and Time Warner merger gets go-ahead


The European competition officials finally gave the merger between the internet giant America Online AOL and the media group Time Warner the go-ahead last wednesday.

There are however, a few conditions have been set so that AOL and Time Warner must cut all their links with music and publishing company Bertelsmann of Germany.

The reason for the commission focussing on these links with Bertelsmann, ensured that this merger would eliminate AOL and Time Warner from total domination of on-line delivery of music over the internet in Europe. Another concession reached was the cancellation of the planned merger of Time Warner Music with the UK-based group EMI, that would have led to the creation of the world's largest music group and would have drastically reduced competition within the European market.

There are still objections however, from the US Federal Trade Commission and this could lead to further concessions being made. They are particularly worried over the combined links to telecoms and broadband provider AT&T that may lead to restrictions in their access to broadband internet services.

The Federal Communications Commission are likely to request open access to Time Warners broadband cable networks, thus suggestions from AT&T were that the deadlock should be broken by forcing Time Warner to buy-out AT&T's 25% stake in them as a condition of the merger deal.

AOL is currently the world's largest internet service provider and Time Warner covers television channels, feature film production, books and magazine production and broadband cable networks. When AOL and Timer Warner announced their merger, they had a stock market value of approximately $245bn and analysts were predicting that this would rise to between $350 and $500 bn.


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