What Upsets Opponents Of A Media Mega-merger They Say An Aol-time Warner Could Control Customers' Access To Information And Entertainment.

By standard antitrust measures, the proposed mega-merger of America Online Inc. and Time Warner Inc. should not set off many regulatory alarms.

Their businesses, after all, are complementary, not overlapping. AOL is the world's largest Internet service provider; Time Warner is the world's largest media company.

Yet the merger, which requires approval by regulatory agencies in the United States and Europe, is getting unprecedented scrutiny, both in the media and in filings to those agencies. Among its most vocal opponents: Walt Disney Co.; BellSouth Corp.; NBC; and Consumers Union, publisher of Consumer Reports magazine.

"The proposed merger of America Online and Time Warner has assumed almost mythic proportions among regulatory, legislative and business circles," Michael Powell, a member of the Federal Communications Commission, said at a hearing last week.

Shareholders of AOL and Time Warner have already approved the deal, but it still requires approval by the FCC, the Federal Trade Commission, and the European Commission.

So what is it about this merger that has so many people shook up - everybody from small Internet start-ups to giant corporations?

Part of the fear comes from the massive nature of the $135 billion deal. Two very large companies are about to become elephantine, raising the issue: "How big is too big?"

But it is the complementary nature of the merger that most disquiets critics. They see it as a merger of two of the country's largest information gatekeepers.

The combined company would have a huge distribution network - AOL's Internet business and Time Warner's cable network - plus a stable of content that includes top-line magazines, movie studios, book publishers and TV networks.

Critics say that, if it wanted to, AOL-Time Warner would be able to control which information and entertainment its customers saw, and particularly what they saw first.

With an interactive TV program guide, for instance, AOL-Time Warner could direct subscribers to its own Cartoon Network instead of the Disney Channel. With its Internet portal, it could provide quick, easy access to Time Warner Web sites and products while burying Disney.com.

In the future world of interactive television, programs will be able to incorporate links that let viewers shop, chat with other viewers, and click for more information. Critics worry that AOL-Time Warner could limit the interactive content of competitors.