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Disney Teams With Gemstar Against AOL/Time Warner

On Wednesday, March 29, 2000, Disney lobbyists helped deliver Gemstar's FCC complaint against the America On-Line and Time Warner merger to members of the U.S. Senate and House of Representatives. Gemstar has agreements with TV stations in every market in the U.S., which allows the company to engrave program information into broadcast signals. VCRs equipped with Gemstar's VCR-Plus technology can then decode the signal, making it easier for users to record TV programming. In the FCC complaint, Gemstar claims that in several markets Time Warner is removing the VCR-Plus encoded material from programs. Disney's chief lobbyist, Bill Pitts, circulated the complaint to more than 100 members of the House and Senate, which included a one-page cover sheet stating Disney "does not oppose the merger of AOL and Time Warner." However, Disney continues to say, "AOL/Time Warner as the owner of a combined cable television/broadband Internet pipeline to the home discriminate(s) in favor of its own channels and program content and against channels and program content owned by others. The Gemstar complaint depicts a perfect example of the discriminatory conduct that we fear -- using control of the pipeline to discriminate and compete unfairly." "Completely wrongheaded" was the comment given by Time Warner spokesman Michael Luftman. "We are supposed to receive compensation," Luftman said. "I don't see that Disney gives things away as charity as part of their corporate soul." Since the beginning of the proceedings regarding the merger, Time Warner has professed to the nth degree that they would not use AOL's on-line service to promote and lead consumers unfairly to Time Warner properties over competitors. Gemstar executive vice president and general counsel Stephen Weiswasser commented, "I think one should measure the sincerity of their promises against the way they actually behave."

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Rick DeMott
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