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AOL-Time Warner merger has majority support, FCC sources say

Only the agency's chairman, William Kennard, hasn't voted on the merger, which three of the four other commissioners favor with some conditions.

    WASHINGTON--America Online and Time Warner have secured the support of the majority of the Federal Communications Commission for their $109 billion merger, agency sources said Thursday.

    According to senior-level officials, four of the five FCC commissioners have voted on the merger, with three voting to approve the deal with some modest conditions.

    FCC Chairman William Kennard is the last remaining vote, sources said. The agency cannot release a decision until all five commissioners have voted. At stake is to what extent, if any, the merged AOL Time Warner will have to operate under specific regulations, such as making its instant messaging services open to at least one other IM provider.

    Asked about his vote at an agency meeting Thursday morning, Kennard would say only, "Stay tuned." The FCC is AOL and Time Warner's last remaining regulatory hurdle; the companies have vowed to close their merger within days after approval.

    Commissioner Susan Ness refused to comment on whether she had voted or if so, how she had voted. She did say, however, that she and the other four commissioners "are having very good discussions." She confirmed progress was being made toward a final decision in a ruling that Kennard had vowed to complete by Dec. 31.

    Discussions are particularly important in this case, for it's not clear that Ness has voted in favor of the same merger approval as Republican Commissioners Harold Furchtgott-Roth and Michael Powell. Furchtgott-Roth and Powell are said to have supported a relatively clean merger approval with little or no conditions, while Ness is believed to have supported the recommendation of the FCC Cable Bureau staff.

    Those recommendations have not been made public, but it's believed the staff advised the commissioners to force AOL Time Warner to make its IM services compatible with at least one other IM provider.

    In the Byzantine world of FCC voting, commissioners can vote on separate versions of a ruling and withdraw and change their votes as different drafts are circulated. If Ness did vote for the merger with tougher conditions, she is outvoted 2-1 by the FCC Republicans. But if Kennard voted with her, the commissioners would have to iron out a compromise, or Kennard and Ness could convince Commissioner Gloria Tristani to change her "no" vote to "yes with conditions."

    FCC sources were unclear as to the specifics of what any conditions might be.

    Thursday's meeting was Kennard's last as chairman, as he has said he will retire after voting on the AOL-Time Warner deal. His most likely replacement is Powell, who Kennard likes to call "the Tiger Woods of telecom policy" for his charisma, skill and diplomacy. At Thursday's meeting, Powell called Kennard "a champion for ideas, for people, for principles."

    A media circus
    The FCC had only one item on its meeting agenda Thursday, a first step toward interoperability of digital public safety services in reserved airwaves. Yet the commission's public meeting room was packed with reporters seeking news on the world's largest-ever merger, and a long line of TV cameras focused on the commissioners' dais.

    Reporters were told by FCC staff that there would be no AOL-Time Warner announcement, but most stayed anyway and were able to witness a mini-roast for outgoing chairman Kennard.

    Wireless Bureau Chief Thomas Sugrue seemed a bit taken aback by the phalanx of cameras as he introduced his airwaves item. Referring to the block of spectrum in which public safety operators broadcast, he joked: "I never knew 700MHz was so sexy."