Shareholders of America Online Inc. and Time Warner Inc. overwhelmingly approved the proposed combination of their two companies Friday, which would create a colossal media player, The Associated Press reported.
Ninety nine percent of Time Warner shareholders casting votes approved the deal in New York, while, 97 percent of AOL shareholders in Virginia registered their support.
Shareholder approval had been widely expected but nonetheless symbolized a growing acceptance of the merger, which baffled investors when it was first announced Jan. 10. AOL stock declined sharply in the two months after the merger was made public, but has since stabilized.
The marriage between AOL and Time Warner, meanwhile, must still be approved by US and European regulators. As such, both firms are now under close scrutiny for predatory tactics by regulators, as well as face opposition from consumer groups concerned about the growing concentration of media control in fewer and fewer hands.
One issue that may prove to be thorny for AOL, is its 91 million strong "buddy list," which competitors demand be opened up. Earlier this month, as a response to mounting pressure from competitors, consumer groups and scrutiny from regulators, AOL announced that the industry would hear from it "soon" on an open standard for instant messaging.
In the meantime, Time Warner has not faired well on the regulatory front either. In May, a very public and ugly confrontation between Time Warner and The Walt Disney Co. cut ABC off Time Warner's cable systems for over 24 hours. Consumer groups and rival companies want the government to force AOL Time Warner to guarantee access to its cable lines by other content providers and Internet service companies.
The European Commission announced Monday that it was extending its investigation of the merger, and reviews are also under way by the Federal Communications Commission and the Federal Trade Commission in Washington.
On Friday the FCC asked the companies for more information on their merger, including AOL's recently announced push into interactive television; AOL's plans for offering Internet access over digital subscriber lines, satellite and wireless services; and geographical information about Time Warner's extensive cable TV systems.
In the months since AOL and Time Warner unveiled their proposed marriage -- which would combine Time Warner's music, movie and magazine content with the online distribution systems of AOL -- other media companies have also been looking for ways to ensure their future in the digital age.
Just this week, Universal Studios owner Seagram Co. announced that it would be acquired by Vivendi, a French water company with a growing Internet and wireless business.
On Friday, at the separate AOL and Time Warner shareholder meetings, the mood was generally upbeat as executives took questions from shareholders and expressed optimism about the future of their combined enterprise, which will be based in New York and called AOL Time Warner.
Time Warner chairman Gerald Levin will be CEO of the new company with responsibility for all day-to-day operations, while AOL chairman Steve Case will be chairman. AOL president Bob Pittman, who had previously worked at Time Warner, will become co-chief operating officer along with Dick Parsons, who is currently president of Time Warner.
During AOL's nearly two-hour meeting in a hotel ballroom, Case tried to allay concerns about regulatory concerns, the company's stock price and whether AOL executives' voices will be heard in the merged company.
“I'm quite confident that in Europe and around the world, there will be support for the merger,” he said. “Even though it is big in size, it is different in character.”
The deal had been valued at $160 billion when it was announced Jan. 10, but lost a considerable amount of value due to a subsequent drop-off in AOL's stock price, which is being used as the currency to buy Time Warner. At current levels, the deal is worth $120 billion -- Albawaba.com
© 2000 Al Bawaba (www.albawaba.com)
