Aol Time Warner Merger Essay Research Paper

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Aol Time Warner Merger Essay, Research Paper Mergers: AOL/Time Warner’s effect on Business By Jason M. Rusk, Business 100 September 3, 2001 The bottom-line to all the hype and talk about the AOL/Time Warner merger is that “Everyone” is running scared. Because, with the merging of companies that control massive amounts of access to the public, and hardware to get their product into your house, there is less and less choices for the American public. And there is even less chance for a smaller company to compete with the “Mega-Media” companies that have been formed in the wake of the telecommunications bill which allows broadcast, cable, and telephone companies to enter each other’s markets, deregulate rates, and permit companies to have much larger monopolies. The

best description of the situation as stated by Jeff Kagan, (telecommunications analyst) is that “Everything is being rewritten from a sub-atomic level”. Everyone from AT&T to ZDnet, has something at stake here with a union of such magnitude. Ten years ago no one would have thought that a startup Internet company (AOL Time-line) would have the power, clout, or cash to make the move to acquire The Media Giant Time- Warner for 106 billion dollars. (This number changes through different phases of research due to the fact that it was an all stock deal, which the stock was worth 183 billion when the deal was struck, but since the announcement of the proposed merger, the FCC took much longer then expected to come to their decision and the stock prices dropped as time went on

before the merger was approved.) With a lot of skepticism and concern AOL and Time Warner announced their intentions to conduct the largest acquisition in history. The last merger of this magnitude was when Viacom Inc. acquired the CBS Corporation for $80 billion, and with that became the world’s leading company in the production, promotion and distribution of entertainment, news, sports and music. And before that Disney acquired ABC for $19 billion. In 1982, Ben Bagdikian wrote The Media Monopoly, an examination of the growing concentration of media ownership. At the time, he calculated that 50 corporations controlled half or more of the media business. He predicted then that eventually this number would fall to about half a dozen companies. This was greeted with skepticism at

the time. When the last edition of the Media Monopoly was published by Beacon in 1993, the number had fallen to less then 20. Since then, and the numbers are still falling. The fear is that a few media giants are slowly dominating the Internet where the top 100 web sites attract nearly half of all page views. In fact, web surfers now spend almost 20% of their online time visiting only the top 10 sites. This is a major concern for smaller startups that don?t get the exposure needed to compete on the internet. The significance of the AOL/TimeWarner merger is that AOL has been the leading advocate of the Open Access debate allowing Internet Service Providers (ISP?s) access to cable lines. AOL has been a vocal proponent of forcing AT&T to open up its cable lines to other

high-speed access providers. Now that AOL has teamed up with Time Warner’s roughly 20 million cable subscribers, some industry observers think AOL may change its tune. Giving them the ability to control what the first screen consumers see when the first log onto the Internet and who gets to bill them for the service. AOL/Time Warner Chairman Steve Case assures its partners in the Open Access debate that it will continue the charge, and allow other ISP?s the same access over it?s own newly acquired cable systems, but that remain?s to be seen. Another great concern to the public and journalists is the massive control that these few media Giants will have over the news that is put out. No different then the way CNN or the New York Times controls what it publishes, these companies