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AOL and Time Warner Confirm Merger Plans
Almost everybody sent this one in: "AOL and Time Warner merge!"
See stories at cnnfn.com, Yahoo! News or almost any other online news outlet. Or go straight to the source(s); the Time Warner and AOL press releases, which make this sound like the greatest thing since the first two 'net nodes were connected together. Now you'll be able to get all your Internet needs, from connectivity to content to shopping, delivered by a single experienced company. No more need to deal with Web sites that stray from the party line, take risks (and screw up now and then), or any of that other messy old-fashioned "Internet as anarchy" stuff. To get online in the future, all you'll need to do is plug in your computer, turn off your brain, and enjoy!
Until AOLScapeWarnerSoftCorp decides that it's not in their best interests. Someone above already mentioned limiting streaming video access from non-affiliated partners; plain HTML access could be next--easily.
I'm not an expert on AOL since I've only used it a couple of times at my parents' house in the last month.
But didn't they try this already? AOL did not always allow access to the internet. Users complained. AOL changed their mind, and left compuserve and prodigy in the dust. Whether they are free or not, people want to think they are. History has proven time and time again that the little guy has the power to beat goliath if he offers something people want.
-Rich
It doesn't really seem too horrible, but who knows.
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um, sigs should be heard and not seen?
rooooar
Comment removed based on user account deletion
Even though AOL will be the purchasing company in terms of stock, will Time-Warner's influence alter the nature of the Mozilla project?
I use Macs for work, Linux for education, and Windows for cardplaying.
Except that AOL, much as we hate it, is the real deal. They have 4 times the profit of Time-Warner (real cash money, not stock profit) on a quarter the sales.
While AOL's profit margin may be higher, you still have a company with revenues of $2.17 per share, buying a company with revenues of $21.85 per share. Time Warner's cash flow is also close to ten times that of AOL. This year, Time Warner had an operating margin of 28%, while AOL pushed 10% for the very first time.
AOL may have proven you can make money with the internet, but I a little nervous as to whether they have worn themselves a little thin.
Wow. You really don't like this, do you? I mean, yeah, it isn't exactly a blow for individuality or innovative thinking, but don't get so worked up. Even assuming it's as bad as you make it out to be, it's not surprising or even a big deal. Let me tell you why:
The Internet is a communications medium. Just as radio and TV are communications media. The major (and this *is* big) difference is that the Internet allows interactivity. If you don't like what's being said, you can post something on USENET, or Slashdot. Or go over to (God help us) Geocities and put up a webpage stating your opinion.
The problem, though, is that most people don't want interactivity. They don't want Tim Berners-Lee's web, where ideas can be exchanged at the speed of light. They just want to go to joecartoon.com and get the latest Gerbil cartoon. Or they want to go to msnbc.com and get the latest news. Or go to ZDNet so they can feel "techno-hip". They don't want to come to Slashdot (please, flamers, refrain from comments regarding free-thinking and Slashdot, I've heard enough). They don't want to try new things, hear new ideas, or contribute their ideas. Maybe they're lazy. Maybe they're afraid. Maybe they're stupid. But to these people, the Intenet is TV over the phone-lines-- they don't care if the connection is two-way.
The AOL-Time-Warner merger is simply a statement of this fact; a glaringly obvious expression of what has been known for a long time. It's not a step forward in the idea of turning off brains, and it isn't even really anything new. This thing is only going to allow people a central site to go to when they want to switch their minds off.
People have turned their brains off for a long time, Roblimo-- this is just going to be a new place to do it.
More and more I'm reminded of the cyberspace scenes as described by Gibson. On the virtual world of the internet we have these larger and larger blocks representing big companies...
Have a look at SmartMoney's Map of the Market, which, I suspect, may have been inspired by the same Gibson reference. It's a very nice way of representing the relative market caps of these big companies (and the movements of the individual companies, market sectors, etc.). Very cool tool...
...j
I've been listening to the analyst's conference call for the past half hour and I have to say the thing that struck me the most was AOL COO Bob Pittman's comments about how this new company will allow for "Maximum promotion of our combined products" and then went out to outline how they will have multiple revenue streams from every household (Internet access, cable subscription, movie buying, magazines to name a few) and the cross-advertising possibilities. Financial analysts will eat this up, but what's it mean for you and me?
I am not qualified to make such a determination, nor am I necessarily opposed to this merger, but I can think certain aspects bear scrutiny.
TimeWarner has a dominant position in a number of media niches, including television news (through the CNN family), newsmagazines (Time), movie and music publishing, etc. ad nauseam. While I don't recall if they're the largest cable operator in the nation (sounds right, though), I do know they serve the largest markets (NYC, LA). They already own a cable ISP (RoadRunner).
After this merger, they'll own the largest ISP in the nation, AND the Netscape browser. (Blah blah Mozilla blah - Mozilla may be open source, but Mozilla isn't Navigator. They'll have the exclusive rights to the Netscape name, and the attendant mindshare.)
This is an unheard of level of vertical integration, and can (likely, will) be used to lock competitive content out of their network. RoadRunner's TOS already includes restrictions on viewing more than 10 minutes of streaming video from anyone but "RoadRunner content partners".
The closest historical analogue to this situation comes from the days when Hollywood studios had a collective lock on the exhibition market - all of the theatres were studio owned, in order to have the right to exhibit films produced by the studios. At that time, not only did this keep competitors out of the exhibition market, but it kept competitors out of the content market; There were no independent films to speak of, as they couldn't be exhibited in studio-owned theatres. This situation also led, naturally, to price fixing, as studios could deny access to the exhibition market anyone wishing to compete by selling tickets at a lower price; studio-owned distributors would simply refuse to service these competitors.
Ultimately, the studios were forced to divest themselves of their theatres as a result of (surprise!) anti-trust action, in the so-called "Paramount Decrees".
I think the parallels here are fairly obvious.
-Isaac
More information about the Paramount Decrees (and more analysis of vertical integration in media) here and here.
I am not a lawyer, and this is not legal advice. For Entertainment Purposes Only.
You forgot to read the press release.
From the AOL press release:
Looks good to me.
-BrentWe saw similar activity in the 80's with the Japanese markets soaring to unbelievable heights.
Remember the fear of the "USA being bought by corporate Japan"?
Japanese companies were an unstoppable force at that time... you had fledgling Japanese companies no one had even heard of 5 years prior buying long-standing Amereican companies with ten times their revenue. The inflated prices of the Japanese stocks enabled them to do this.... Just as AOL is now able to buy Time Warner, a well established company with much greater revenues and cash flow.
Will this be like the Japanese market of the 80's? When the Japanese bubble eventually burst and left numerous companies with more than they could chew... or will power of "The Internet" continue ever onward?
Maybe next we will see Yahoo buy Disney... it is certainly not unthinkable.
Now you will be logged off of Time Warner if you don't change channels every three minutes. When you turn your cable box on, you will fail to connect about 50% of the time. Your tv images will now be compressed to save bandwith at the expense of your image quality.
But reading these press releases, both companies feel that they need to push the internet to be central in our lives. May I ask why?
Sure, in this day and age, not knowing the internet is going to hurt your job chances, but that's because doing research and some buying on the net is much faster than placing phone calls or snail mail. But there are still things that you cannot do on the net and will never be able to do on the net, such as grocery shopping, having a sincere discussion with a friend or loved one, and much more. Yet, like this AOL/TW deal, businesses think that it CAN replace all that.
What also bothers me about this is that companies are trying to define the way the internet works. Anyone else see those Nortel Network commercials "What do you want the Internet to be?" I'm sorry, but you nor a company nor a governement can define the purpose or behavior of the internet; it's a mass result of 6 billion people working together, and changes every single day. Sure, companies may try to map their little area of the network around to fit their goals, but there will always be anarchie and entropy on the internet. It's part of it's being.
More and more I'm reminded of the cyberspace scenes as described by Gibson. On the virtual world of the internet we have these larger and larger blocks representing big companies; they merge and migrate, and look very dominating over everything else on the landscape. But there will always be space between said blocks, and that space is the true stuff of the net - freedom of individual thought.
Now that I've finished going poetic...Some things that I don't worry about : Limited content: AOL already had this without TW's help. That part of the merger doesn't change anything as long as all other possible content that is non-AOL or TW remains untouched.
The merger itself - I may have missed this, but this is all pending FTC approval, right? I have a feeling that there may resistance from the FTC *AND* shareholders in this. So nothing's written in stone yet.
"Pinky, you've left the lens cap of your mind on again." - P&TB
"I can see my house from here!" - ST:
I'll be seeing ads in TIME magazine telling me how to $$$GET!!!RICH!!!FAST!!!$$$?