Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (50 page)

25.
Ibid.

26.
Kara Swisher,
There Must Be a Pony in Here Somewhere: The AOL-Time Warner Debacle and the Quest for a Digital Future
(New York: Random House Digital, 2003), 41.

27.
“AOL: The Internet Company That Grew Up,”
BBC News
, October 11, 2000,
http://news.bbc.co.uk/2/hi/business/597479.stm
.

28.
Greg Sandoval, “AOL, Here's How You Screwed Up,”
CNET News
, August 5, 2010,
http://news.cnet.com/8301-31001_3-20012730-261.html
.

29.
“Thriving Netscape Could Set Standard for All Commercial On-Line Businesses,”
San Francisco Chronicle
, April 3, 1995.

30.
“The growth of the Web was supposed to kill proprietary online services. That was why the New Media committee at Time Warner had recommended against buying AOL in 1994” (David Streitfeld, “AOL Rode a Wave, Time Missed the Boat; How Steve Case's Crew Beat the Odds,”
Washington Post
, January 16, 2000); Stacy Cowley, “Red Hat Picks up Pieces of Netscape,”
InfoWorld Daily
, September 30, 2004. Kara Swisher (
There Must Be a Pony
, 58) quotes Steven Levy's crack of 1996: “Every day the Net gets closer to filling its ambitious promise, [the Big Three's—CompuServe, Prodigy, and AOL] clock ticks closer to midnight. They look a lot like dead men walking.” Steven Levy, “Dead Men Walking?”
Newsweek
, January 21, 1996,
http://www.thedailybeast.com/newsweek/1996/01/21/dead-men-walking.html
.

31.
“Historic Dates for AOL,”
San Jose Mercury News
, January 11, 2000.

32.
In the Matter of Applications for Consent to the Transfer of Control of Licenses and Section
214
Authorizations by Time Warner Inc. and America Online, Inc., to AOL Time Warner Inc.
, 16 F.C.C.R. 6547 (January 22, 2001).

33.
This statistic was set out in a staff report to FCC chairman William Kennard: Deborah Lathen,
Broadband Today
(Washington, D.C.: Federal Communications Commission, 1999).

34.
Ibid., 11–12.

35.
“Management's goal is to make AOL services available from any electronic device short of a blow dryer (and maybe even a blow dryer) within a handful of years” (Jeff Fischer, “AOL Anywhere,”
The Motley Fool
, May 12, 1999,
http://www.fool.com/portfolios/RuleBreaker/1999/RuleBreaker990512.htm
).

36.
Swisher,
There Must Be a Pony
, 156.

37.
In the Matter of Applications for Consent to the Transfer
, 16 F.C.C.R. at 6561.

38.
Ibid., 6566.

39.
Swisher,
There Must Be a Pony
, 80–81.

40.
“AOL-Time Warner Merger,”
PBS Online NewsHour
, January 10, 2000,
http://www.pbs.org/newshour/bb/business/jan-june00/aol_01-10.html
.

41.
Nina Munk, “Power Failure,”
Vanity Fair
, July 2002.

42.
“Reliable Sources,”
CNN
, January 15, 2000,
http://transcripts.cnn.com/TRANSCRIPTS/0001/15/rs.00.html
.

43.
“NBC Warns on Merger Plans,”
Financial Times
, July 26, 2000.

44.
Allan Sloan, “3 Worst Deals of 2009,”
Fortune
, November 17, 2009, available at
http://money.cnn.com/2009/11/16/news/economy/bad_business.fortune/index.htm
.

45.
Content industry executive, interview with the author, June 24, 2010.

46.
Andrew Jay Schwartzman, Counsel for Consumers Union, et. al., to Deborah Lathen, Chief, Cable Services Bureau, Federal Communications Commission, November 14, 2000, cited in
In the Matter of Applications for Consent to the Transfer
, 16 F.C.C.R. at 6658, n. 687.

47.
“AOL-Time Warner Merger.”

48.
Tom Rosenstiel and Bill Kovach, “The Bad Business of Media Mergers,”
New York Times
, January 14, 2000, available at
http://www.nytimes.com/2000/01/14/opinion/the-bad-business-of-media-mergers.html?scp=2&sq=aol+time+warner+merger+press&st=nyt
.

49.
Richard Cotton, Executive Vice President and General Counsel, and Diane Zipursky, Vice President, Washington Law and Policy, National Broadcasting Company, Inc., to Magalie Roman Salas, Secretary of the Federal Communications Commission, July 24, 2000, cited in
In the Matter of Applications for Consent to the Transfer
, 16 F.C.C.R. at 6591, n. 298; David Hatch, “NBC on Record Opposing Consolidation,”
National Journal
, December 7, 2009, available at
http://techdailydose.nationaljournal.com/2009/12/nbc-on-record-opposing-consoli.php
; Mike Masnick, “A Look Back: NBC's Words Against AOL/Time Warner Merger May Come Back to Haunt,”
TechDirt
, December 8, 2009,
http://www.techdirt.com/articles/20091207/1559557238.shtml
.

50.
In the Matter of Applications for Consent to the Transfer
, 16 F.C.C.R. at 6644.

51.
“AOL/Time Warner: Open Up,”
The Economist
, November 23, 2000, available at
http://www.economist.com/node/434130
;
Bloomberg News
, “AOL, Time Warner Grant Access to 2nd Web Firm,”
Baltimore Sun
, November 21, 2000, available at
http://articles.baltimoresun.com/2000-11-21/business/0011210008_1_time-warner-aol-america-online
.

52.
Federal Trade Commission, “FTC Approves AOL/Time Warner Merger with Conditions,” news release, December 14, 2000,
http://www.ftc.gov/opa/2000/12/aol.shtm
; Jim Hu, “FTC Approves AOL-Time Warner Merger,”
CNET News
, December 14, 2000,
http://news.cnet.com/2100-1023-249897.html
; Federal Communications Commission, “Subject to Conditions Commission Approves Merger Between America Online, Inc. and Time Warner, Inc.,” news release, January 11, 2001,
http://transition.fcc.gov/Bureaus/Cable/Public_Notices/2001/fcc01011.txt
.

53.
In 2003, the AOL Time Warner Inc. board voted to drop “AOL” from its name. See Chris Isidore, “Time Warner Drops AOL Name,”
CNN Money
, September 18, 2003,
http://money.cnn.com/2003/09/18/technology/aol_name/
. “Employees from the Time Warner side blame [Steve Case] for crippling their company (and destroying their retirement accounts)” (see Nina Munk, “Steve Case's Last Stand,”
Vanity Fair
, January 2003, available at
http://www.ninamunk.com/documents/SteveCasesLastStand.htm
). In 2005, six former executives of Time Warner Inc.’s America Online unit and former business partner PurchasePro.com were indicted on charges of conspiracy to inflate revenues through backdated contracts and revenue swaps. See Andy Sullivan, “Former AOL, PurchasePro Execs Indicted,”
Reuters
, January 10, 2005, available at
http://www.eweek.com/c/a/IT-Management/Former-AOL-PurchasePro-Execs-Indicted/
.

54.
As John Malone said in November 2009, “I think it [TW's inability to make vertical integration work] really speaks to the kind of silo mentality that Time Warner had. They were never really able to get the synergies out of the AOL deal, they were never able to get the synergies out of owning content and cable” (“John Malone and David Faber,” video of interview, 40:00–40:45,
CNBC
, November 23, 2009,
http://video.cnbc.com/gallery/?video=1340949341
); Nina Munk,
Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner
(New York: Harper Collins, 2004).

55.
“Time Warner Chairman and CEO Jeff Bewkes Addresses the AOL Time Warner Merger,” YouTube video, 1:01 from a TVWeek.com Innovation360 recording on October 13, 2009, posted by “trukdivad,” October 16, 2009,
http://www.youtube.com/watch?v=nxUz3zzfWJk
.

56.
John Borland, “Comcast, AT&T Cable Deal to Create Net Giant,”
CNET News
, December 20, 2001,
http://news.cnet.com/2100-1033-277261.html
; David Lieberman, “Comcast to Buy AT&T Broadband,”
USA Today
, December 20, 2001, available at
http://www.usatoday.com/tech/techinvestor/2001/12/20/att-comcast.htm
.

57.
“AOL-Time Warner Merger: 10 Years Later” “Levin Is Sorry for Creating AOL Time Warner,”
New York Times, DealBook
(blog), January 4, 2010,
http://dealbook.nytimes.com/2010/01/04/levin-apologizes-for-aol-timewarner-a-decade-later/
.

58.
The current combined values of the now-separated companies is about 14 percent of their worth on the day of the merger. Tim Arango, “How the AOL-Time Warner Merger Went So Wrong,”
New York Times
, January 10, 2010, available at
http://www.nytimes.com/2010/01/11/business/media/11merger.html?pagewanted=all
. As Allan Sloan reported, “The day the deal was announced, Jan. 10, 2000, Time Warner closed at the equivalent of $184.50 a share. After almost 10 years of travail, the $184.50 has shrunk to about $42.25, consisting of one Time Warner share and a quarter of a Time Warner Cable share. The 77 percent decline is triple the decline in the Standard & Poor's 500-stock index over the same period” (“Deals: The Financial World's Turkeys of the Year,”
Washington Post
, November 17, 2009, available at
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/16/AR2009111603775.html
).

59.
“AOL-Time Warner Merger: 10 Years Later.”

60.
Federal Trade Commission, “FTC Appoints Monitor Trustee in AOL/Time Warner Matter,” news release, February 26, 2001,
http://www.ftc.gov/opa/2001/02/montrust.shtm
.

61.
In the Matter of Applications for Consent to the Transfer
, 16 F.C.C.R. at 6603-04.

62.
David D. Kirkpatrick, “F.C.C. Lifts Ban on Video for AOL Instant Messaging,”
New York Times
, August 21, 2003, available at
http://www.nytimes.com/2003/08/21/technology/21AOL.html
; Declan McCullagh and Jim Hu, “FCC Lifts AOL Messaging Limits,”
CNET News
, August 20, 2003,
http://news.cnet.com/2100-1032_3-5065650.html
; Jim Hu, “AOL Asks FCC to Lift IM Restriction,”
CNET News
, April 4, 2003,
http://news.cnet.com/2100-1032-995595.html
.

63.
Ledbetter made this statement in an interview with Ray Suarez. See “AOL-Time Warner Merger,”
PBS Online NewsHour.

64.
Behrend v. Comcast Corp.
, 655 F.3d 182, 187 (3d Cir., August 23, 2011) (describing clustering as a strategy used by cable operators to concentrate their operations in regional geographic areas in regions where the operator already has a significant presence);
In the Matter of Review of the Commissioner's Program Access Rules and Examination of Program Tying Arrangements
, 25 F.C.C.R. 746, 764 (January 20, 2010) (describing incumbent clustering of cable systems). The acquisition of Adelphia Communications enabled Time Warner to cluster cable holdings in geographic areas. See Geraldine Fabrikant, “Time Warner and Comcast Seal Adelphia Purchase,”
New York Times
, April 22, 2005, available at
http://www.nytimes.com/2005/04/22/business/media/22cable.html
.

65.
“
Comcast/NBC Universal Merger
,” at 14 (statement of Mark Cooper, Director of Research, Consumer Federation of America).

66.
Charles B. Goldfarb, “The Proposed ComcastNBC Universal Combination: How It Might Affect the Video Market,”
Congressional Research Service
, February 2, 2010,
http://assets.opencrs.com/rpts/R41063_20100202.pdf
.

67.
Comment by “Rick,” in response to Karl Bode, “Will Cable's ‘TV Everywhere’ Be a Big Pile of Fail?”
Broadband Reports
, March 24, 2010,
http://www.broadbandreports.com/forum/r24000094-Sorry-Karl-but
. Two-dot ellipses were silently changed to three-dot ellipses.

68.
Ken Auletta, “A Conversation with John Malone,” October 16, 2002 (transcript),
http://www.kenauletta.com/2002_10_16_johnmalone.html
.

69.
Ibid.

70.
Steven Levy, “Dead Men Walking?”

71.
“What makes this issue particularly touchy: Xfinity is only available to people who subscribe to cable video in addition to broadband. So Comcast's policy effectively could be a deterrent against its customers cutting the cable cord to rely on online video” (Shalini Ramachandran, “Netflix CEO's Comcast Complaints Draw in FCC,”
Wall Street Journal, Digits
(blog), April 16, 2012,
http://blogs.wsj.com/digits/2012/04/16/netflix-ceos-comcast-complaints-draw-in-fcc/
.