June 23, 2000 3:15 PM PDT
AOL-Time Warner merger approved by shareholders
More than 99 percent of Time Warner shares were voted in favor of the merger at a special shareholder's meeting here.
AOL shareholders meeting near the company's headquarters in Vienna, Va., also approved the deal. Nearly 97 percent of shareholders voting approved the $123 billion merger first announced in January, according to a preliminary count.
While both the companies' board of directors as well as their shareholders have now approved the merger, the deal continues to face U.S. and European regulatory scrutiny.
On Monday, the European Commission chose to open a more in-depth, four-month investigation rather than approving the deal.
The European antitrust body said it was concerned about the integration of Time Warner's content with AOL's Internet service, particularly in light of a major promotional alliance between AOL and German media giant Bertelsmann. The commission said it is worried that the merged company's agreement with Bertelsmann would allow it to control too tightly how content may be distributed, perhaps allowing AOL Time Warner to dictate a standard of distributing music over the Net.
Time Warner CEO Gerald Levin today downplayed the regulatory concerns.
"(The European Commission's decision) is consistent with our own declaration that we expect to close the merger some time this fall," said Levin.
Levin added that Internet access over cellular devices would diminish AOL Time Warner's impact on European competitors.
"Handhelds--primarily cell phones--are growing very rapidly in Europe and Japan, much more so than here," said Levin. "This is an area that really isn't constrained by previous views of more centralized control."
However, the issue of overwhelming control, especially around AOL's dominant lead in the instant messaging area, has already raised red flags at the Federal Trade Commission (FTC), the U.S. regulatory body investigating the merger.
AOL has said its instant message service, AIM, has 91 million screen names in its Buddy List network--a tremendous lead over its rivals. Companies such as Microsoft and CMGI have demanded AOL open AIM to their services, allowing the varied systems to interoperate.
The ongoing skirmishes between AOL and its rivals has drawn the attention of both the FTC and the Federal Communications Commission. A coalition of technology leaders, including CMGI and Microsoft, have requested that regulators investigate the issue as part of their review of the pending merger between AOL and Time Warner. Just last week, AOL proposed instant messaging standards that may clear the way for rival services to work together.
"The antitrust review has been given to the (Federal Trade Commission). There is nothing to report right now. It?s an unusual merger because there are no overlapping assets," Levin said.
The pending merger was initially valued around $164 billion, but declines in the stock prices of the two companies have shaved about 24 percent off the value of the deal.
If approved by federal regulators, Time Warner stockholders would receive 1.5 shares in the combined company, AOL Time Warner, for each share owned. AOL shareholders would receive one share in the new company for each share owned.
AOL chief executive Steve Case would become the chairman of the new company, and Levin would become chief executive of AOL Time Warner.
Reuters contributed to this report.