FCC Holdup Means AOL-Time Warner Merger Odyssey Will End in 2001 - TheStreet

FCC Holdup Means AOL-Time Warner Merger Odyssey Will End in 2001

The commission's voting delay comes as no surprise to the public or the stock.
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Hold on tight, folks, because we've got some breaking news: The U.S. government shuts down between Christmas and New Year's.

Yup. As reported by

The Wall Street Journal

Thursday, it doesn't look as if the

Federal Communications Commission

, which waited until mid-December to get down and dirty in passing judgment on the pending merger of

America Online

(AOL)

and

Time Warner

(TWX)

, will get around to voting on the deal before the champagne corks start popping.

That means that AOL and Time Warner, which had hoped to close their deal by the end of the year, will have to wait until 2001 to complete their merger odyssey.

AOL shares recently were off 79 cents, or 2.2%, to $34.96, while Time Warner shares fell 82 cents, or 1.5%, to $52.68. AOL didn't respond to a call about today's report, and a Time Warner spokesman declined to comment.

The possibility the deal might not close until January was widely publicized last week with the disclosure of a letter filed on behalf of AOL at the FCC that week. The letter revealed that an AOL executive warned of "substantial burden and expense" to AOL of closing the merger after the end of the year, because of the need to file more than 10,000 partial-year state and local income tax returns, the need to make additional filings with the

Securities and Exchange Commission

and the undertaking of "costly and duplicative" audit and accounting reviews, among other duties.

On Dec. 20, the day the letter was publicized, AOL's stock fell 8.6% and Time Warner's fell 10.3%, though the companies issued a statement that the possibility of a closing in the early days of January was consistent with what they'd said in the past about the merger's timetable. The companies also intimated that additional costs associated with a January closing wouldn't be material.

Judging from recent FCC filings, it appears that the commission's primary area of concern is the growth of the instant-messaging market, which AOL dominates through its

AOL Instant Messenger

and

ICQ

services.