Federal Communications Commission

Washington, D.C. 20554

June 9, 2000

Arthur H. Harding, Esq.

Fleischman and Walsh, LLP

1400 Sixteenth Street, N.W., Suite 6000

Washington, D.C. 20036

Peter D. Ross, Esq.

Wiley Rein & Fielding

1776 K Street, N.W.

Washington, D.C. 20006

Re: Applications of America Online, Inc., and Time Warner Inc. for
Transfers of Control, CS Docket No. 00-30

Dear Mr. Harding and Mr. Ross:

The purpose of this letter is to inform you that Commission Staff have
determined that additional information is required for a complete
evaluation of the application filed by America Online, Inc. ("AOL") and
Time Warner Inc. ("Time Warner") (collectively, "Applicants") for
Commission approval of the proposed transfer of control of Commission
licenses and authorizations from Time Warner to AOL Time Warner.
Accordingly, we have attached a series of document and information
requests that are intended to assist in our consideration of the merger
application. These requests extend to AOL, Time Warner, and each firm's
respective affiliates or subsidiaries and cover all forms of
documentation, including all electronic versions and any copies with
notations or interlineations. We anticipate that additional requests
will be forthcoming.

Any documentary material requested that contains material deemed
proprietary or confidential should be filed with the Commission pursuant
to the Protective Order adopted in this proceeding on April 6, 2000 (DA
00-780). Please note that the process for filing documents containing
proprietary or confidential documents will be as follows:

A party filing a confidential document must deliver in person two copies
of the confidential document to Royce Dickens and Linda Senecal at 445
Twelfth Street, S.W., Room 3-A734. In addition, the party must file with
the Secretary's Office one copy of the entire confidential document and
two copies of the confidential document in redacted form, each with an
accompanying cover letter. The confidential document and accompanying
cover letter should be stamped "Confidential -- Not for Public
Inspection." The two copies of the redacted document

Arthur H. Harding, Esq.

Peter D. Ross, Esq.

June 9, 2000

Page 2

and their accompanying cover letter should be stamped "Redacted -- For
Public Inspection."[^1] The cover letters accompanying both sets of
documents should state that the party is filing a confidential document
and its redacted version. Other than having different stamps (*i.e.*,
"Confidential -- Not for Public Inspection" or "Redacted -- For Public
Inspection."), the cover letter should be the same for the confidential
and redacted copies. The documents to be filed with the Secretary's
Office should be delivered in person at 445 Twelfth Street, S.W., Room
TW-B204 to: (i) Magalie Roman Salas, Secretary; or in her absence, (ii)
William F. Caton, Deputy Secretary.

In order to expedite the Commission's review of the proposed merger, AOL
and Time Warner should file these documents as they are identified,
rather than waiting for all to be prepared for submission. Also, AOL and
Time Warner should provide all requested information and documents
within three weeks of the date of the request, *i.e.*, no later than
June 30, 2000. If you have any questions or issues regarding these
requests, please contact Royce Dickens at 418-7030.

> Sincerely,
>
> To-Quyen Truong
>
> Associate Chief, Cable Services Bureau

Attachment

cc: Magalie Roman Salas

Deborah Lathen

Jim Bird

**Applications of America Online, Inc., and Time Warner Inc. for
Transfers of Control**

**CS Docket No. 00-30**

**Document and Information Request No. 1**

**June 9, 2000**

On or before, June 30, 2000, please respond to the following document
and information requests pertaining to the proposed merger.

### AOL's Ownership Interest in Hughes Electronics Corporation ("Hughes")

1.  At page 11 note 15 of the Supplemental Information ("SI") statement,
    Applicants state that AOL invested \$1.5 billion in a General Motors
    ("GM") equity security and that GM then invested the \$1.5 billion
    in a security of Hughes under similar terms. The SI further states
    that GM has a current market capitalization (at the date the SI was
    filed) in excess of \$50 billion.

a\. What is General Motors' current market capitalization?

b\. What is Hughes' current market capitalization?

> c\. Please produce documents to support your answers to the questions
> in a. and b.

2.  At page 13 note 21 of your SI, Applicants state that AOL has
    2,669,633 shares of GM's Series H 6.25% Automatically Convertible
    Preference Stock ("Preference Stock"). You state that this
    Preference Stock is convertible to GM's Class H common ("GMH")
    stock, which is a publicly held tracking stock that tracks the
    economic performance of Hughes.

a\. Under what circumstances may AOL choose to convert its Preference
Stock?

b\. If AOL were to convert its Preference Stock today, how many shares
of GMH stock would it have?

c\. What percentage of GMH stock would AOL's GMH shares constitute?

> d\. What percentage of Hughes' economic value does AOL's Preference
> Stock represent?
>
> e\. What percentage of Hughes' economic value would AOL's GMH stock
> represent?
>
> f\. What effect will the GMH 3 for 1 stock split have on the value of
> AOL's Preference Stock? Will it increase the number AOL's possible GMH
> shares? If so, if AOL were to convert its Preference Stock today, how
> many shares of GMH stock would it have? After the GMH 3 for 1 stock
> split, and upon conversion of its Preference Stock to GMH stock, what
> will AOL's percentage voting interest in General Motors constitute?
> What percentage of GMH stock would AOL's GMH shares constitute?

g\. Please produce documents to support your answers to questions in
this paragraph.

3.  Please identify all matters on which only GMH shareholders may vote.
    Please produce documents to support your response to this request.

4.  How are the directors of Hughes and DirecTV elected? Do the GMH
    shareholders have the right to vote for the board of directors of
    Hughes and/or DirecTV?

5.  Please produce the agreement of strategic alliance between AOL and
    Hughes to which you refer on pages 10-11 of your SI.

### Deployment of New Services

6.  Describe Time Warner's local telephony roll-out plans and (if
    applicable) its actual roll-out of such services for the following
    periods:

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a.  pre-merger (*i.e.*, from January 1, 1998, to the date of the Merger
    Agreement);

b.  the present (*i.e.*, from the date of the Merger Agreement to the
    present);

c.  post-merger (*i.e.*, after consummation of the merger, assuming it
    is approved). Please specifically state how the merger would change
    Time Warner's prior rollout plans.

In responding to the foregoing, please identify the geographic areas
that Time Warner planned to serve, actually serves, and plans to serve
in the future; describe the means of offering local telephony (*e.g.*,
resale of ILEC services, facilities-based service); quantify the planned
and actual investment in this service; and quantify the planned and
actual number of homes passed and subscribers served or planned to be
served by systems offering this service.

1.  Please provide all documents relating to the telephony plans
    discussed in your response to request 1.6.

2.  Describe and quantify all AOL or Time Warner ownership interests and
    voting and management rights in entities providing any kind of
    telephony service, whether local or long distance, circuit-switched
    or packet-switched (*e.g.*, Net2Phone), and describe and quantify
    the ownership interests and voting and management rights of all
    other entities holding ownership interests of 5% or more in those
    entities.

3.  Describe Time Warner's roll-out plans and (if applicable) its actual
    roll-out of high-speed Internet access services for the following
    periods:

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a.  pre-merger (*i.e.*, from January 1, 1998, to the date of the Merger
    Agreement);

b.  the present (*i.e.*, from the date of the Merger Agreement to the
    present);

c.  post-merger (*i.e.*, after consummation of the merger, assuming it
    is approved). Please specifically state how the merger would change
    Time Warner's prior rollout plans.

In responding to the foregoing, please identify the geographic areas
that Time Warner planned to serve, actually serves, and plans to serve
in the future; quantify the planned and actual investment in this
service; and quantify the planned and actual number of homes passed and
subscribers served or planned to be served by systems offering this
service.

1.  Please provide all documents relating to the high-speed Internet
    access plans discussed in your response to request 1.9.

2.  Describe Time Warner's roll-out plans and (if applicable) its actual
    roll-out of digital cable television services for the following
    periods:

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a.  pre-merger (*i.e.*, from January 1, 1998, to the date of the Merger
    Agreement);

b.  the present (*i.e.*, from the date of the Merger Agreement to the
    present);

c.  post-merger (*i.e.*, after consummation of the merger, assuming it
    is approved). Please specifically state how the merger would change
    Time Warner's prior rollout plans.

In responding to the foregoing, please identify the geographic areas
that Time Warner planned to serve, actually serves, and plans to serve
in the future; quantify the planned and actual investment in this
service; and quantify the planned and actual number of homes passed and
subscribers served or planned to be served by systems offering this
service.

1.  Please provide all documents relating to the digital cable rollout
    plans discussed in your response to request 1.11.

[Instant Messaging]{.underline}

2.  According to commenters, AOL originally pledged to work with the
    instant messaging ("IM") industry to create an interoperability
    standard, but has since ceased participation in the standard setting
    process. Please provide a narrative response to the following
    questions.

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a.  Is AOL actively working with other IM providers to set standards for
    interoperability? If not, why? If so, in what capacity?

b.  Can other IM providers' customers currently connect with AOL's IM
    customers?

c.  If not, how is this beneficial to AOL and its IM customers?

d.  If so, are the alternate IM providers required to sign a licensing
    agreement that includes payment to AOL for access to AOL customers?

e.  Does AOL pay for access to alternative IM providers' customers?

Please produce all documents generated since January 1, 1998, relating
to AOL's involvement in, and analysis of, the IM standard setting
process, including any analysis of the costs and benefits to AOL and its
customers (and the customers of alternative IM providers) of an IM
industry-wide interoperability standard vs. no industry standard. Please
produce all documents discussing actual or proposed terms for any and
all licensing agreements that AOL has entered, negotiated, or otherwise
discussed with alternate IM providers for access to each other's
customers.

### General Corporate Information

1.  Please provide copies of the 1999 annual reports and SEC 10-K
    filings for AOL and Time Warner.

[^1]: Where the content of the confidential document is redacted in
    whole, the title of the confidential document may be submitted in
    place of the actual redacted document.