The problem is Time Warner Cable. It’s doubtful that any U.S. RBOC wants to talk to AOL because of the fear of creating an 800-lb. gorilla that also has Cable assets. ILECs hate their cable counterparts. Moreover, they fear them.

So, one might think that the logic is to spin off or sell off Time Warner Cable. But wait — isn’t that a profitable business? Can’t do that right now… the mother ship needs to maintain as much margin as it can for reporting.

Hmm… maybe they should spin off AOL. Now, since it was AOL that actually bought all the other assets in the first place, wouldn’t that be ironic?

🙂

-Ian.

—- http://story.news.yahoo.com/news?tmpl=story&ncidX2&e=3&cidX2&u=/nm/ 20021122/wr_nm/media_parsons_dc

AOL Time Warner CEO to Sullen Execs: ‘Get Over It’ Fri Nov 22, 6:58 PM ET

Add Technology – Reuters Internet Report to My Yahoo!

By Reshma Kapadia

NEW YORK (Reuters) – “Get over it.” That is what AOL Time Warner Inc. (NYSE:AOL – news) Chief Executive Richard Parsons has told company executives angered by the decline in the media giant’s stock price as he tries to refocus them on the future.

Some employees inside the world’s largest media company could be characterized about six months ago as “sullen but not mutinous” amid disappointment over AOL’s $106.2 billion purchase of Time Warner but now many of them are moving to acceptance, Parsons said at a Variety media conference here.

Parsons said he has had various conversations with executives who feel they have been “screwed” by the deal as the value of their portfolios and options sink amid the 55 percent drop in the company’s stock this year.

“I say to them you have to get over it because you can’t go back and undo the past,” Parsons said. “The challenge we all have is how to figure out how to build value back in the company. If you really really can’t get past that, then you have to go somewhere else.”

The company has suffered from weakness at its America Online unit, which has been mired in slow advertising spending and subscriber growth and federal accounting probes, as well as the failure to deliver on the promises made after the merger.

Many AOL Time Warner employees have left, especially AOL veterans, but Parsons said the company is making progress on priorities he set out this summer including regaining credibility with investors, simplifying the company and fixing America Online.

“Getting (AOL) back on track –stabilizing the business and putting it back on the growth track — we think we are at a point where we have confidence we can do that,” Parsons said, ahead of a Dec. 3 meeting when executives try to convince Wall Street. “But then there is the execution part.”

TASTES GREAT, LESS FILLING

Going forward Parsons said the priorities include running the businesses well and improving collaboration between the divisions — from America Online, music and publishing to the networks, film and cable systems — instead of each unit’s management trying to protect their own profit/loss.

“To some extent this is a tough turn to make because the media either wants to put you in two categories: it tastes great or it’s less filling,” Parsons said. “What we need to do is run business and run well and extract additional value out of the portfolio of businesses. That’s the challenge for us.”

Much has been said about the company’s failure to date of getting its many fiefdoms to work together, but Parsons said AOL Time Warner has to create an understanding of what it is trying to achieve overall so each unit understands — instead of forcing “synergies” down each division.

“We can’t order them (to collaborate), but can we make the case to employees that if they do things this way the result will better for all,” said Parsons, often characterized in the industry as a consensus builder.

Avoiding deals that would complicate its corporate structure and reducing its $28 billion in debt are also Parsons’ priorities as he tries to turnaround the company.

Parsons, a former Time Warner veteran who took the helm this summer after Gerald Levin resigned, sought to distance himself a bit from his predecessors.

He acknowledged that he had some doubts about the 30 percent growth targets set out after the merger — the targets the company severely missed and that have led to much of the investor discontent.

“(In the 1990s) growth became this enormously important thing and (people) would throw out growth targets without looking at what was under that. You can’t grow a company our size with $40 billion in revenue and a target of growing it 30 percent a year. That’s not the real world (news – Y! TV).”

———–

NEW YORK (AP) – AOL Time Warner Inc. is buying out AT&T Corp.’s stake in their cable television, moviemaking and programming partnership for an estimated $8.5 billion to $9 billion, and said it may sell a stake in its cable TV operations in an initial public offering as early as next year.

The deal announced Wednesday involves the decade-old Time Warner Entertainment partnership, which includes most of AOL Time Warner’s cable TV systems and its Warner Bros. film studio, its Home Box Office pay-TV service and other programming businesses.

The two sides have been in discussions for some time on unwinding the partnership known as TWE. AOL Time Warner owns about 72.4 percent of the partnership, and AT&T owns the rest.

The deal gives AT&T cash and readily saleable assets, while AOL Time Warner avoids having to buy its partner out for cash at a time when it is struggling under a heavy debt.

In morning trading on the New York Stock Exchange ( news – web sites), shares of AOL Time Warner rose 69 cents to $14.05, while AT&T gained 54 cents to $11.72.

Under the terms of the deal, AT&T gets $2.1 billion in cash and AOL Time Warner stock valued at $1.5 billion, as well as a 21 percent stake in the Time Warner Cable Inc. business in exchange for its stake in TWE.

While AOL Time Warner didn’t affix a value to the cable stake, The Wall Street Journal said it would boost the total value that AT&T is getting in the deal to between $8.5 billion to $9 billion.

For its part, AOL Time Warner gets full ownership of Warner Bros. and HBO and stakes in the TV channels Comedy Central, Court TV and The WB Network.

In addition, AT&T and Comcast have agreed to make America Online’s high-speed version of its Internet service available on Comcast’s cable systems. That type of arrangement could give AOL access to more customers.

The stake in the cable business should benefit Comcast Corp., which is buying AT&T’s cable TV businesses and would inherit AT&T’s stake in TWE. The former Time Warner created the TWE partnership in 1992.

The cash, AOL stock and Time Warner Cable shares will go to Comcast if that company completes its AT&T cable operation before year’s end, which is expected.

AT&T and Comcast will get an immediate influx of cash and will be able to sell its stakes in both AOL Time Warner and the new cable business in the future to generate more money.

AOL Time Warner chief executive Dick Parsons said the deal was “the best possible outcome for our investors” and will simplify its overall structure.

“AOL Time Warner will recapture total ownership and control of its content businesses, enabling us to manage this portfolio of assets for maximum value. And all of the company’s state-of-the-art cable assets will be combined for the first time into a well-capitalized, pure-play cable company,” he said.

AOL plans to conduct an initial public offering of part of its stake in the Time Warner cable business soon after the restructuring in completed in early 2003.

That would enable it to pay down the debt incurred in making the $2.1 billion cash payment to AT&T, AOL said.

“The fact is that AOL or Time Warner has had managerial control of all of the assets within TWE since 1999,” said Katherine Styponias, an analyst at Prudential Securities. “So it’s not as if being completely owned by AOL is going to mean things are going to change radically. Nevertheless, it’s one less thing to worry about when trying to put a value on the company.”

———–

> From: “Jim Whitehead”
> Date: Tue Jul 23, 2002 01:27:06 PM US/Pacific
> To: “FoRK”
> Subject: AOL scaling back IM interoperability
>
> I suppose the main surprise here is that AOL is coming clean at
> all. After
> all, its long-running game of talking interop, and doing
> everything possible
> to prevent open standards in this arena, seemed to have been
> working fine,
> with most end users completely oblivious to AOL’s actions.
>
> http://www.quicken.com/investments/news/story/djbn/?story=/news/stories/dj/
> 2
> 0020723/ON20020723000833.htm
>
> America Online Scales Back Instant-Messaging Compatibility Efforts
> Updated: Tuesday, July 23, 2002 01:23 PM ET
>
> Dow Jones Newswires
>
> NEW YORK — America Online appears to be scaling back efforts to
> make its
> instant-messaging service compatible with rival services.
>
> The unit of AOL Time Warner Inc. (AOL, news, msgs) said in a regulatory
> filing it is now focusing on messaging interoperability methods
> that are
> more limited in scope than the kind envisioned by the Federal
> Communications
> Commission when it approved the AOL-Time Warner merger in January 2001.
>
> America Online isn’t required to make its messaging system
> interoperable
> with others, but the FCC’s merger approval included what it
> considered to be
> incentives for the company to do so. It also required AOL to file
> progress
> reports on its interoperability efforts every six months. The most
> recent
> report, filed last week, disclosed the company’s new direction.
>
> The upshot of the strategy shift is that the instant-messaging
> market isn’t
> much closer to broad-based interoperability than it was 18 months ago,
> according to industry analysts. Unlike e-mail, users of most competing
> instant-messaging services still can’t directly trade messages. So an
> America Online instant- messaging user can’t communicate with a user of
> Microsoft Corp.’s (MSFT, news, msgs) MSN Messenger, except by using
> third-party software such as Trillian.
>
> America Online, the biggest instant-messaging provider, has been
> criticized
> for blocking users of rival services from gaining access to its
> users. The
> company also has been accused of dragging its feet amid industry
> attempts at
> interoperability.
>
> For its part, America Online has said it wants to protect the
> security of
> its users and the reliability of its system. And it points out
> that other
> companies have so far failed to agree on interoperability standards.
>
> When the FCC approved the AOL-Time Warner merger, it said that if
> America
> Online wanted to offer video-conferencing and other advanced
> instant-messaging features over Time Warner’s cable lines, it
> first had to
> enable its instant- messaging users to communicate with users of rival
> services. The intent of the condition was to prevent America
> Online from
> widening its dominance of the instant-messaging market by
> exploiting its
> access to Time Warner cable systems.
>
> AOL hasn’t yet introduced video features, even though rivals
> Microsoft and
> Yahoo Inc. (YHOO, news, msgs) did so last year.
>
> Specifically, the FCC said America Online would have to implement a
> technology known as “server-to-server interoperability” before it could
> offer video. The technology would allow users of non-America
> Online services
> to detect when AOL users are online, and to trade messages. It
> would do so
> via communications between the computer servers operated by each
> messaging
> provider, using a common language.
>
> But in the progress report filed with the FCC last week, America
> Online said
> it will “focus its efforts” on alternatives to server-to-server
> interoperability. They are more limited in scope than server-to-sever.
>
> As an example of an alternative, America Online cited a recent
> agreement to
> make its instant-messaging service compatible with a new messaging
> service
> from Apple Computer Corp. (AAPL, news, msgs). The Apple service,
> IChat, will
> be included in Mac OS X 10.2, the new Apple operating system set
> for release
> in August.
>
> IChat users will be able to talk to America Online users, but it won’t
> involve server-to-server interoperability. Instead, the actual
> exchange of
> messages will occur only on America Online’s servers, even as IChat
> customers use Apple software.
>
> “We believe this kind of hosted IM solution provides, at least in
> the short
> term, a secure, reliable and cost-effective means to provide
> interoperability between AOL, IM and unaffiliated IM communities,”
> Steven
> Teplitz, AOL’s associate general counsel, wrote in the progress
> report to
> the FCC.
>
> As to the apparent change in strategy, company spokeswoman Kathy
> McKiernan
> said Tuesday: “It’s a recognition that server-to-server has proven
> a hard
> nut to crack for the entire industry.” Indeed, users of America
> Online’s
> rival services can’t directly communicate with each other, either.
>
> The alternative solution “was something that we could implement now to
> provide for IM communities to communicate,” said Ms. McKiernan, adding
> America Online would explore partnerships with other messaging
> providers,
> similar to the Apple deal. None has been announced so far.
>
> FCC officials couldn’t be reached Tuesday.
>
> America Online hasn’t ruled out the possibility that it would someday
> implement server-to-server interoperability. The company has
> explored the
> technology in the past, including a server-to-server last year
> with Lotus
> Development, a unit of International Business Machines Corp. (IBM,
> news,
> msgs).
>
> But America Online’s interoperability test with Lotus was “limited
> in scope
> and functionality.” True server-to-server technology “would
> require further
> significant expenditures of time and resources to develop,” wrote Mr.
> Teplitz.
>
> The Internet Engineering Task Force, a group devoted to developing
> Internet
> standards, has been working on a server-to-server messaging
> technology but
> hasn’t yet developed a final version, according to America Online. Task
> force representatives couldn’t be reached.
>
> The company’s strategy shift means that true interoperability in
> instant
> messaging is still a couple of years away, according to Michael
> Gartenberg,
> analyst with Jupiter Research.
>
> “It’s still something the market wants,” he said. “At some point, it’ll
> happen, but maybe a couple of years down the road.”
>
> Mr. Gartenberg and other analysts believe America Online hasn’t
> actively
> pursued true interoperability because it wants to protect its
> large user
> base. If messaging systems were compatible, the company could lose
> ground
> because prospective customers might see no difference in choosing
> another
> provider, as long as they can reach America Online users.
>
> But partly because of its lack of compatibility and the FCC conditions,
> America Online hasn’t kept up with rivals in offering new
> services. MSN and
> Yahoo have had video-conferencing via instant-messaging since last
> year. AOL
> has denied that it has held back on video messaging to avoid making its
> system interoperable, arguing there is little consumer demand for it.
>
> But the new features have paid off for the company’s rivals, and
> they are
> catching up. Between last October and April, Microsoft’s Messenger
> user base
> rose 32% to 29.1 million, according to ComScore Media Metrix,
> while Yahoo’s
> base jumped 19% to 19.2 million users. In the same period, the
> number of
> users of AOL-branded messaging services increased 7% to 54.9 million.
>
>
> -Peter Loftus; Dow Jones Newswires; 201-938-5267;
> peter.loftus [at] dowjones [dot] com
>
> Copyright 2002 Dow Jones & Company, Inc.
> All Rights Reserved
>
>
> http://xent.com/mailman/listinfo/fork

———–

-Ian.

http://dailynews.yahoo.com/h/nm/20010111/ts/media_timewarner_dc_5.html

Thursday January 11 10:17 PM ET AOL Acquires Time Warner After FCC Approval

By Jeremy Pelofsky

WASHINGTON (Reuters) – Internet giant America Online Inc. on Thursday acquired cable and media conglomerate Time Warner Inc., becoming the world’s largest media company after winning conditional approval from the Federal Communications Commission.

Exactly a year and a day after the companies announced their historic marriage of old and new media, the five-member FCC unanimously agreed to let AOL and Time Warner go forward despite a dispute over what conditions to put on the companies.

However, the commissioners voted 3-2 to place restrictions on the new company’s advanced instant messaging system when it runs over Time Warner’s cable lines. They also voted to force further access to the cable pipeline by competing Internet services.

“These conditions are designed to protect the open competitive nature of the Internet,” FCC Chairman William Kennard said. “They protect consumers and avoid heavy-handed regulation by using a narrowly-tailored market opening approach.”

The FCC approval, after months of internal discussion at the agency, allowed the world’s biggest Internet services provider to close its $106.2 billion purchase of the media and cable conglomerate to create an unparalleled company spanning television programming, movies, magazines and cyberspace.

Time Warner has the second-largest collection of cable systems in the United States and an enormous publishing arm that includes Sports Illustrated and People magazines while AOL has close to 29 million Internet subscribers, including 2.6 million CompuServe members.

The two companies won antitrust approval from the Federal Trade Commission on Dec. 14 after agreeing to open cable television lines to several rival Internet service providers before launching AOL’s own service and allowing consumers a wide choice of content. THE NEW AOL TIME WARNER

The companies closed the deal late on Thursday and the new media and Internet behemoth will be called AOL Time Warner with headquarters in New York City. It will trade on the New York Stock Exchange under the symbol “AOL” .

Shares of AOL closed up $2.34 to $47.23 while shares of Time Warner shares rose $4.19 to $71.19.

“AOL Time Warner will lead the convergence of the media, entertainment, communications and Internet industries, and provide wide-ranging, innovative benefits for consumers,” Steve Case, chairman of the new company, said in a statement.

Prior to the combination, the companies had said they expected revenues of more than $40 billion in their first year, growing at 12 to 15 percent a year.

“We are hitting the ground running with a clear road map for creating value for our customers, business partners, shareholders and employees,” said Gerald Levin, chief executive officer of AOL Time Warner.

Although consumer groups had pressed hard for regulators to put strict limitations on the combination, one organization hailed Thursday’s action by the FCC as a step toward expanding consumer choice.

“What could have been a disaster for consumers now holds the potential to promote competition and consumer choice,” Gene Kimmelman, co-director of Consumers Union said in a statement. The companies had hoped for quick FCC approval once they got FTC clearance but communications regulators became locked in weeks of debate over details of its own set of conditions.

The conditions adopted did not appease all sides however. The two Republicans on the panel, Michael Powell and Harold Furchtgott-Roth, disagreed with attaching any conditions, while Democrat Gloria Tristani wanted tougher ones on instant messaging. CONDITIONS ON AOL TIME WARNER

If the new AOL Time Warner launches advanced instant messaging services like video conferencing across its high-speed cable pipeline, it will have to make it interoperable with rival instant messaging services, the FCC said.

But, the commission stopped short of forcing AOL to make its current popular instant messaging software that allows real-time chats via typed messages interoperate with that of rivals like Microsoft and ExciteAtHome .

“At the end of the day, I believe the record and the anti-competitive theory did not support mandating interoperability,” Powell said in a statement.

While Tristani pushed hard for the tougher condition she said ”voting in favor of the decision serves consumers better than lodging a dissent.”

The instant messaging conditions expire in five years but AOL Time Warner can petition the FCC earlier arguing that the conditions are no longer necessary because contracts with big competitors have been reached or an industry-wide standard for interoperability exists.

As for access for rival Internet service providers (ISPs) to the new company’s cable lines, which can offer consumers high-speed Internet service, the companies were required to allow consumers to have their pick of ISPs carried on the cable lines.

AOL Time Warner cannot pressure consumers to subscribe to its own Internet service and must allow the unaffiliated ISPs on thesystem to choose the content of their opening page. The rival ISPs can also have direct billing with their customers, according to the FCC.

Additionally, the FCC said it expects the new company to negotiate in good faith with small and regional ISPs as well as big ones. AOL Time Warner already has signed up EarthLink Inc., the No. 2 ISP in the United States, to offer its own Internet service.

Instead of subjecting AOL Time Warner to conditions on the nascent market of interactive television, the FCC said it will seek comment on the emerging technology.

However, the FTC antitrust authorities in its review of the deal prohibited the merged company from discriminating against content that passes through the systems provided by rivals like The Walt Disney Co.

“>http://www.apple.com/DTDs/PropertyList-1.0.dtd”> date-sent 979287848 flags 570686593 original-mailbox local:///Import/foib sender Ian Andrew Bell <hey [at] ianbell [dot] com> subject @F: Big Surprise.. to foib [at] egroups [dot] com ]]> 3425