EarthLink (Nasdaq: ELNK) rose 9/32 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 EarthLink signed last month with Time Warner Cable allowing the Internet service provider access to Time Warner's systems beginning in the second half of next year.
The deal marks the first open-access agreement between a major cable company and an unaffiliated Internet service provider. Dave Baker, EarthLink vice president 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 will have real choices in broadband Internet providers and content," said Baker. "We applaud the FTC for its diligence in making sure that this merger truly benefits consumers."
The FTC commissioners voted 5-0 in favor of the US$111 billion deal, after the companies agreed to take steps to ensure that competition in the high-speed Internet sector would continue. The EarthLink deal was designed to allay concerns that the combined company would dominate, giving AOL preferential access to Time Warner's vast cable system.
The cable giant now must give three more competitors access to its system within 90 days.
The companies have more than 80,000 employees between them, and more than $140 billion in annual sales. The merger brings together properties including Time Warner's Time magazine, CNN, Warner Brothers, HBO, Sports Illustrated 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 Internet
service provider in the United States. The company also provides
hosting and e-commerce services.
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