Disney Continues Attack on AOL-Time Warner Merger with Concerns over ITV

The battle of the giants continued in late October as Walt Disney Company filed another complaint with the Federal Communications Commission over a proposed merger between Time Warner and America Online. This time, Disney is protesting that the companies will keep competitors from using AOL/TW-controlled interactive-TV services

The merger is part of a conspiracy to prevent the transmission of Disney programming into areas fed by TW cable, in the view of Disney-funded lobbyists and attorneys who have been fighting the merger since it was first suggested. Despite Disney's best efforts with the FCC, and with the Federal Trade Commission, the merger is near approval in Washington. European Union commissioners have also given their tacit approval to the merger after nixing the acquisition of EMI Group by Warner Music, which would have created a virtual monopoly of the European music market.

AOL, the world's largest Internet service provider, based in Dulles, VA, made a much-heralded move last year to acquire media conglomerate Time Warner—a move that Disney, owner of ABC Television, immediately objected to. Both AOL and TW have assured regulators that they have no intention of blocking consumers' access to programming provided by rivals—meaning Disney or anyone else.

"Interactive TV" is the industry's Holy Grail, and an unproven point of contention in Disney's latest filing. Disney's concern is the control AOL-TW will have over phone lines and cable for use as "return paths" for TV viewers to interact with programming, as in buying products featured on TV shows by visiting the websites of affiliated manufacturers or retailers. AOL and Time Warner responded to the charges in a filing to the FCC, saying it wouldn't make sense to block access to rival programmers. "AOL and Time Warner's surest route to failure in interactive television would be to restrict or degrade consumers' access to a true diversity of interactive content and service offerings," the AOL-TW filing stated.