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6 <br />merger will transform the Internet from a communication medium, originally <br />coveted by academic and scientific professionals, to a highly evolved ubiquitous <br />media entertainment and communication economic engine. <br />Tirne Warner was created in 1990 merger of Warner Communications and Time, <br />Inc. while AOL was founded in 1985. AOL has four times the net profit of Time <br />Warner. For the fiscal yeaz ending June 30"', 1999, AOL earned $762 million,on <br />$4.8 billion in sales against TWI's $26.8 billion gross revenues. <br />While AOL has become a cable and telecommunication company, the merger <br />completes the transformation of Time Warner's cable systems into comprehensive <br />digital networks, The merger grants AOL access to Time Warner's 20 million <br />homes, making AOL the largest provider of information distributed via a wired <br />broadband platform, It offers AOL's 13 million customers, many of which aze <br />Time Warner cable subscribers, direct high speed access to AOL's content <br />engines via the cable modem platform. Likewise, Time Warner cable subscribers <br />will have access to the same platform and content database delivery engines. <br />Soon, Tirne Warner's vast intellectual property libraries, as well as AOL's, will be <br />delivered at light speed via fiber optic cable and cable modems upon the click of a <br />mouse and fora "small fee" to the public. <br />The combined revenues of the media giant is expected to exceed $30 billion. <br />Under the deal, Time Warner shareholders will receive 1.5 shares of AOL-Time <br />Warner for each shaze of Time Warner stock. AOL stock holders will receive one <br />share of AOL-Time Warner stock for each share of America Online stock. The <br />market value of Time Warner is estimated to approach $97 billion and AOL is <br />currently valued at $1x54 billion: . <br />AOL offers services in 15 countries and 7 languages: Time Warner, via CNN <br />serves 1 billion households world wide; it has 2.2 million CompuServe customers <br />' and 120 million magazine readers: <br />N. METHODOLOGY: '~ <br />Time Warner's submission to the Franchise Authority was evaluated to determine <br />whether the operator provided information about the transferee consistent with the, <br />procedures prescribed by the Federal Communications Commission. Documents <br />provided by Time Warner about AOL and AT&T were read carefully. Information <br />famished by the transferees was evaluated against similar information lmown by the <br />consultant: information which had been gathered over time by the consultant from trade <br />journals and electronic information sources about the transferees' character, legal,, <br />technical, financial-business practices. <br />-2- <br />