X-SciTech

Stockholders Approve Mega-Merger

By CBSNews.com staff CBSNews.com staff

June 23, 2000 / 12:09 PM EDT / CBS

A mighty "Yes!" is in the air at AOL headquarters in Dulles and Time Warner headquarters in New York, following separate votes by stockholders of the two companies approving the planned merger of AOL and Time Warner.

The votes in favor of the $120 billion merger were overwhelming in both cases, with 97 percent of AOL stockholders and 99 percent of Time Warner stockholders voting in favor of the mega-merger.

The deal still needs the approval of federal regulators.

Steve Case, AOL chairman and chief executive officer, calls the vote "a major milestone" and says each day since the merger was announced last January, "we are seeing more and more potential for what America Online and Time Warner can achieve together for consumers worldwide."

Gerald Levin, Time Warner chairman and chief executive officer, also talked about the possibilities of the new combination, saying the company looks forward to "taking advantage of our expanding opportunities in the Internet, entertainment, information and communications industries to the benefit of our customers, communities and shareholders."

Deborah Adamson of CBS MarketWatch reports the Federal Communications Commission and the Federal Trade Commission are expected to act on the merger this fall.

While many consumer advocates have expressed concern about the implications of creating a media giant strong on the web, in print, and on cable television, some observers predict government regulators will not stand in the way.

Youssef Squali, an industry analyst at ING Barings, tells CBS MarketWatch that he believes government regulators will greenlight the corporate marriage.

Squali comments that he does not see AOL's stake in DirecTV, a satellite television service and Time Warner rival, to be problematic because satellite television is "a niche market."

Objections to the merger have also come from Disney and Bell South, who have both been arguing that regulators should impose restrictions on the new entity before approving any merger.

One of the biggest sticking points among merger critics including the Consumer Federation of America has been concern over the new company being in a position to potentially control both access to the internet, for example through a cable modem, and access to cable television.

Both Time Warner and AOL, however, have promised that they would open up their cable television lines to other Internet service providers.

AOL, with more than 20 million subscribers, is the nation's largest Internet provider. Time Warner is the biggest media conglomerate, with properties including Time Magazine, Warner Brothers Studios, HBO and CNN.

The merger's critics are not confined to the United States. The European Commission announced Monday that it is extending its own investigation into the competitive implications of the new supersized media company.

If the merger goes through as planned, Time Warner and America Onlne stock will be converted to AOL Time Warner stock, and will trade on the New York Stock Exchange under the symbol AOL.