were the ones getting grilled by the
House Telecommunications Subcommittee
Wednesday, but it was federal regulators who went through the meat grinder.
AOL Chairman Steve Case and Time Warner Chairman Gerald Levin, who are hoping to close the megamerger of their companies later this year, endured House members' questions about access to their cable systems, instant messaging and, in an unexpected, emotional moment, the causes of violent behavior in America.
But neither the questions from the committee nor the executives' answers broke much new ground. And any venom from the committee, which doesn't actually have a direct role in approving the AOL-Time Warner deal, seemed reserved for the
Federal Communications Commission
Federal Trade Commission
, which along with European regulators are reviewing the merger. Shares of both companies slid Wednesday amid a selloff in Internet stocks; AOL slid $2.48, or 4.5%, to $53.02, while Time Warner lost $3.91, or 4.9%, to $76.59.
Can't Get No Satisfaction
Subcommittee chair Rep. Billy Tauzin (R., La.) took the opportunity to express his dissatisfaction with the approval process that these companies are enduring, in the form of private negotiations with staffers at the FTC and FCC. Those negotiations give unelected officials too much freedom to demand concessions and conditions that aren't being sought from similarly situated competitors, Tauzin said.
"I think the process stinks," Tauzin said.
Despite his sympathies for AOL and Time Warner, Tauzin isn't completely deaf to the companies' critics. Following protests from Democrats who complained that the subcommittee wasn't giving equal time to competitors and other people outside the merging companies, he announced he'd be scheduling a
second hearing. Presumably, that's when some of the merger's critics will get their chance to speak out against it in its current form.
The most antagonistic part of the hearing had nothing to do with regulators, cable or instant messaging. Rather, it arose after Rep. Bobby Rush (D., Ill.) asked for an assessment of the role and causes of violence in America. Levin said the causes of violence in the U.S. were more complex than is often argued in public debate; the executive cited contributing factors such as guns, drugs and failures in the educational system, as well as the lack of parental and religious authority in people's lives. "There is a national epidemic that is not solely attributable to the media," he said.
Soon afterward, Rep. Steve Largent (R., Okla.) said he noticed that Levin omitted "the graphic movies, music that your company produces" as a contributing factor.
Levin, whose son Jonathan, a New York City high school teacher, was murdered by a former student in 1997, responded: "My son used materials that we produced to reach children in the South Bronx that were otherwise unreachable. ... He used their vocabulary." When Largent sought to follow up with another question along the same line, Levin grew angry. "I would prefer that you not pursue it because this is something that is more personal to me, not professional," he said. When Largent started to speak again, Levin interrupted him again. "You haven't had the personal anguish that I had," he said.
The ostensible subject of the hearing -- the future of interactive television -- was touched on only briefly by the representatives on the committee. Levin and Case said that the interactive television they plan to offer is too young and speculative to legislate. "No one knows today what interactive television will look like in the years ahead," Levin said.
Furthermore, said Case and Levin, AOL and Time Warner face competition from interactive TV delivered over high-speed communication conduits other than cable systems: high-speed phone lines, satellites and wireless transmission.
On that point, Rep. Tauzin said questions remain over whether, in fact, the competition will be as robust as AOL and Warner suggests it will be -- whether consumers will have real choice or "illusory choice."