Time Warner shares rose 8% this week as market expectations grew that the last piece of the regulatory jigsaw delaying America Online (AOL)'s takeover of the media giant is about to fall into place.

The Federal Communications Commission (FCC) is expected to give its approval to the deal some time this week. Having wrestled for weeks with the idea of posing heavy restrictions on the combined group, the FCC now looks set to give the go-ahead with few strings attached.

The five-member commission had been reportedly been split over the issue of AOL's instant messaging service, which it is expected to require be opened to third parties. Commissioner Gloria Tristani was understood to have been particularly concerned by the issue of video services being carried by messaging channels.

When it approved the deal last month the Federal Trade Commission (FTC) required Time Warner's cable network to be opened to a number of other high-speed ISPs. The FCC has sought to define what constitutes business-class internet services in order to frame its own detailed access requirements.

The FCC said last week that it would force AT&T to sell its 25% stake in Warner Entertainment, a company that owns the majority of Time Warner's cable operations. The FCC ruled that spinning off these interests into AT&T's Liberty Media was not satisfactory and that AT&T had therefore failed to comply with an earlier ruling requiring it to decrease its cable holdings.

Unless AT&T succeeds with an appeal, the FCC ruling is expected to mean that the US' two largest cable groups shed their overlap and compete head on.