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6 <br />million subscribers or 41.8% of Multichannel Video Programming Distributor <br />(MVPD) subscribers, which represents 51.32% of nationwide cable subscribers. <br />On June 5, 2000, the FCC has granted conditioned approval of the <br />AT&T-MediaOne Merger. As anon-severable condition to granting the <br />application, the FCC requires the applicants to complete one of the following <br />options to reduce its attributable ownership interests to 30% of MVPD subscribers <br />nationwide: 1) divest their interests in Time Warner Entertainment; 2) insulate <br />their interests in Time Warner Entertainment (TWE) by ending involvement in <br />TWE's video programming activities, which entails selling AT&T's programming <br />interests, including Liberty Media Crroup; or 3) divest their interests in other cable <br />systems, which involves divesting cable systems serving approximately 11.8% of <br />subscribers nationwide (i.e., more than 9.7 million subscribers or more than half <br />of AT&T's current subscribers) <br />If AT&T chooses to sell its TWE interest (option #1), it is likely that the City will <br />have to review and approve that transaction as well. The new owner could be <br />another cable company, a telephone company, another Internet service provider or <br />some other company seeking to position itself the new e-commerce economy. <br />A. AUL-TWI Merger <br />AOL is acquiring Time Warner. To effect the merger, the companies propose to <br />eliminate their existing stock and issuing shares in a new company, AOL-Time <br />Warner. This is the largest corporate merger in the history of the USA, Time <br />Warner, the world's largest media and entertainment company, will be acquired in <br />a stock swap by America Online for about $168 billion. The merger unites the <br />biggest name in traditional media with the world's largest Internet company. The <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 />Time 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 year 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 />Franchise Fee U-Tax Auditing & Cable Television Administration <br />101 Pocono Lane, Cary, North Carolina 27513-5316 Voice # 919.467.5392 Fax # 919.460.6868 <br />