NBC takes Disney's side, opposes AOL-Time Warner union

General Electric's TV network joins in the fight against America Online's purchase of Time Warner, urging federal regulators to impose stiff conditions on the transaction.

WASHINGTON--General Electric's NBC has joined in the fight against America Online's purchase of Time Warner, urging federal regulators to impose stiff conditions on the transaction.

NBC, in a filing with the Federal Communications Commission (FCC), said the combined AOL Time Warner, as the new company would be dubbed, should be forced to provide Internet and video rivals with nondiscriminatory access to their cable lines. NBC's entry into the fight against the transaction is a boost for Walt Disney, which owns TV network ABC.

Until now, Disney has been alone among the major TV networks in opposing the combination.

"The merged entity will have both the economic incentive and the ability to secure substantial competitive advantage by discriminating against unaffiliated content providers," NBC said.

NBC submitted its filing as Disney took its fight to Capitol Hill yesterday, using a 10-minute video to outline the risks to consumer choice.

Disney showed the video to influential staffers of the House and Senate's commerce and judiciary committees, which have broad authority over communications and antitrust issues in Congress.

While Congress has no formal role in the review, the opinion can carry considerable weight and help influence public opinion as regulators review the combination.

Disney's chief Washington lobbyist, Preston Padden, said the company is concerned about the transaction because it ''marries AOL's closed and proprietary walled-garden market environment with Time Warner's content assets and bottleneck cable distribution pipelines.''

As a result, the combined AOL Time Warner would have the opportunity and incentive to discriminate against competitors such as Disney that want to offer content on New York-based Time Warner's cable lines, said Padden, executive vice president of government relations for Disney.

The highly polished video featured snippets of scenes from popular ABC-TV shows such as "Who Wants to Be a Millionaire" and uses a host to explain Disney's complicated arguments against the $144 billion transaction.

The presentations were made a day before Disney filed an 80-page document with the FCC outlining a proposal to force AOL Time Warner to separate its content and distribution businesses. Disney made its case for a separation to FCC staffers earlier this month, though today's filing will go into more detail.

Disney also will suggest that the FCC impose stiff, detailed, nondiscriminatory requirements on the company as conditions for approving the transaction. NBC also supports requirements to ensure equal access for rivals, though it didn't ask that the company be forced to split its divisions.

The FCC is holding a hearing on the transaction Thursday. AOL chief executive Steve Case and Time Warner CEO Gerald Levin are scheduled to testify. Padden also is scheduled to testify, along with companies fighting Dulles, Va.-based AOL's continued refusal to let customers of unaffiliated instant messaging technology interact with AOL's service.

Disney's concerns focus on AOL Time Warner's ability to promote its programming and You've got
Time Warner interactive content over similar services offered by rivals. It could do that by using on-screen program guides directing viewers to the combined company's channels and programs, by slowing the speed that rivals' Web sites could be accessed, and by preventing viewers from using interactive services not affiliated with AOL or Time Warner. NBC echoed those concerns in its filing.

AOL and Time Warner deny the charges, saying they will use program guides to make consumers' viewing easier, rather than to promote their own content. They also deny that they'll give preferential treatment to their own services.

The companies remain committed to content diversity, open access and consumer choice, spokesman Kathy McKiernan said.

"Unfortunately, Disney lobbyists are less interested in the facts than in spinning fantasies that would work better in the movies," McKiernan said.

Padden said the company has repeatedly asked AOL and Time Warner for commitments that the new company will treat content from other providers the same as it treats its own, a request so far refused.

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