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A background of the aol time warner merger

For example, the pro-regulatory media organization Free Press has already set up a website to complain about the deal. A Net nanny reigning in potentially restless souls. To say that the merger failed to create the sort of synergies and profits that were originally hoped for would be an epic understatement. The day the deal was announced, Jan.

15 years later, lessons from the failed AOL-Time Warner merger

In 2006, it announced that it was putting 18 of the 50 magazines in its Time magazine division up for sale. Paranoid predictions of a pending media apocalypse followed.

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Its shockwaves will undoubtedly recast our entire media landscape. Rather than engage in open combat and competition, cable powerbrokers such as Comcast and AOL-Time Warner will likely accommodate Murdoch and add his new channels to their own services. Imagine Fox News on steroids. In December 2006, News Corp.

News Corp/DirecTV: Murdoch’s “Digital Death Star” Blows Up

Microsoft finds itself in a heated war with Google on all fronts, AOL-Time Warner has fallen apart, and Comcast is squaring off against telco e. Meanwhile, Karmazin abandoned Viacom and is now struggling to find a way to make subscription-based satellite radio survive the ongoing digital music bloodbath caused by the rise of online music services and a little thing called the iPod.


Of course, hysteria ran rampant when Sirius and XM were merging, too. Subscription radio just does not have that much appeal to most people.

Once again, a great deal of hand-wringing ensued. Chairman John Malone, which owns DirecTV, has suggested that they might push the government to reject the deal. As the adjoining exhibit illustrates, the overall number of video programming channels available in America has skyrocketed, from just 70 channels in 1990 to 565 channels in 2006, the last year for which the FCC has made data available.

More importantly—and despite claims to the contrary—vertical integration in the video marketplace has plummeted over the past two decades. While many more cable and satellite networks are available today a background of the aol time warner merger ever before, the greatest share of the growth in the multichannel video marketplace has come from independently owned video networks. Since 1990, the number of cable-owned or affiliated channels has increased slightly, but it pales in comparison with the growth of independently owned and operated video networks.

In real terms, therefore, the percentage of the overall video marketplace controlled i. Even if the merger of Comcast and NBC-Universal results in slight increase in industry vertical integration, it almost certainly will not surpass 20 percent.

Consumers would flock to alternative video providers and media services if Comcast played such games.

The Time Warner story: Consolidation, de-consolidation and re-consolidation

The great thing about the modern media marketplace is that there is always another place for consumers to turn to find something they want. Frankly, local broadcasters need all the eyeballs they can get these days. And intense competition exists for some of the most important news and informational services that NBC offers, such as local news, weather, and traffic.

Regulators need to be forward-looking about what is driving this deal. As such, Comcast is hedging through diversification into content, moving up the media value chain. Comcast will be looking to replace lost revenue in distribution with revenue from content advertising, subscriptions, etc. This would be a merger, after all, of two businesses that seem headed toward some combination of the fates of newspapers, music CDs and the old wireline telephone business.

Customers want the product for free.

AOL-Time Warner formed

True, the number of households that have actually dropped their cable subscriptions in favor of subsisting on TV streamed or downloaded from the Internet is not yet large.

Yet an escape route is vexingly hard to envision. Time Warner and Comcast have been talking up plans to make their respective cable lineups available by computer—as long as you keep paying your cable bill. This is a stopgap, especially appealing to anyone who owns two homes but wants to pay only one cable bill. Never mind, too, that hundreds of shows are already available online for free, via Web sites operated by none other than Comcast and the TV networks themselves.

Let Markets Evolve The point here is not that media mergers are inherently good or always make sense. Indeed, as the examples discussed above illustrate, mergers sometimes prove to be huge blunders.

Media markets are extremely dynamic and prone to disruptive change and technological leap-frogging. Mergers are often one response to that turbulence.

A Brief History of Media Merger Hysteria: From AOL-Time Warner to Comcast-NBC

Sometimes collaboration makes a great deal of sense, especially when the significant costs of providing a media service becomes impossible absent a partnership.

Indeed, federal officials and agencies are currently exploring how or whether journalism can survive an era of seeming perpetual media upheaval. Given how difficult it is to predict the future course of events in this chaotic sector, humility—not hubris—is the sensible disposition when it comes to media merger policy.

  • Yet an escape route is vexingly hard to envision;
  • Snatching Defeat from the Jaws of Victory?
  • And to round it off a typical new economy ailment - dodgy accounting - has reared its head at the group's online unit;
  • But love has gone out of the relationship, and corporate viagra is in short supply;
  • Today, Time Warner no longer owns its namesake magazine;
  • Home Box Office Inc.

At a minimum, policymakers should insist that ongoing debates are governed by facts instead of fanaticism, because, if the past decade is any guide, discussions about media mergers have been more often rooted in hyperbolic rhetoric and unsubstantiated hysteria. Snatching Defeat from the Jaws of Victory?

Where Are They Now? Seven Stories Press, 2002 at 31. The Star Wars Wiki, http: Monopoly or Competition from New Technologies: Most of the younger people I know have iPod docks in their vehicles for listening to music. Smartphones are bringing music and podcasts to mobile consumers.

E-reading machines have wireless connections that can eventually deliver content on a subscription or pay-per-use basis.

I really do not need the sports channels from Sirius if I can watch and listen to the games I want on my phone. As time goes by, satellite radio will be viewed as a stepping-stone technology that was replaced by smartphones and other portable media devices.