EarthLink Gains on Time Warner-AOL Merger

EarthLink (Nasdaq: ELNK) rose9/32 to 7 11/16 Thursday following U.S. Federal Trade Commission approval of the merger of America Online, Inc. (NYSE: AOL) and Time Warner Corp. (NYSE: TWX).

The decision clears the way for an agreement EarthLinksigned last month with Time Warner Cable allowing the Internet serviceprovider access to Time Warner’s systems beginning in the second half ofnext year.

The deal marks the first open-access agreement between a major cable companyand an unaffiliated Internet service provider. Dave Baker, EarthLink vicepresident for law and public policy, said the deal “can serve as a model”for other companies.

“[The] FTC decision helps ensure that Time Warner Cable customers willhave real choices in broadband Internet providers and content,” said Baker.”We applaud the FTC for its diligence in making sure that this merger trulybenefits consumers.”

The FTC commissioners voted 5-0 in favor of the US$111 billion deal, afterthe companies agreed to take steps to ensure that competition in thehigh-speed Internet sector would continue. The EarthLink deal was designed to allay concerns that the combined companywould dominate, giving AOL preferential access to Time Warner’s vast cablesystem.

The cable giant now must give three more competitors access to its systemwithin 90 days.

The companies have more than 80,000 employees between them, and more than $140 billion in annual sales. The merger brings together propertiesincluding Time Warner’s Time magazine, CNN, Warner Brothers, HBO, SportsIllustrated and Warner Music Group with AOL’s branded Internet service,CompuServe, Netscape and ICQ.

Time Warner and AOL agreed on the merger back in January.

EarthLink, headquartered in Atlanta, Georgia, is the second-largest Internetservice provider in the United States. The company also provides hosting and e-commerce services.

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