The road to the merger
What does “synergy” mean?
Is media concentration the end of democracy?
What happens to diversity?
Is everything dumbing down?
Is the independent reporter a thing of the past?
The end of local hard news
Or is the future bright?
So did the synergy work?
This essay will evaluate the implications of the AOL Time Warner merger on news accuracy and identity. It will firstly describe the changing economic situation in the 1980s and 1990s, which led to media ownership concentration. The essay will further give a brief summary of both companies and their way of becoming one and describe the essential term of “synergy”. The next paragraph will then summarize the position of Frank A. Blethen, the publisher and CEO of the Seattle Times Co, towards media conglomerates. The essay will further discuss the concerns he raised: Firstly, he argues that conglomerates decrease the diversity of news and that the quality of news will be less important for big companies than profit. He further proclaims conflicts for the journalist in reporting negative news about the company they are working with and mentions the problems for local news providers. The essay will then discuss other possible effects and will finally evaluate whether the merger has been a success until now.
The 1980s and 1990s saw a big change in the world market. In that time a so defined “climate of international ‘alliance capitalism’, [in which] corporations building the strongest alliances are envied, and often […] the most profitable” (Paterson, 1998) emerged. Monopolies, where industry sectors are co-operatively divided between companies and oligopolies, which means industry sectors are shared by just a few big companies, have become routine (Paterson, 1998).
The road to the merger
AOL is “the world's leader in interactive services, Web brands, Internet technologies, and e-commerce services” (AOL Time Warner, 2000), was founded in 1985 and provides Internet access to more than 20 million members worldwide. Time Warner is the world's leading media company with cable and digital media, cable networks, publishing, music and filmed entertainment (AOL Time Warner, 2000). AOL made $4.8bn in revenue in the 12 months to June 1999 and Time Warner’s revenue in 1998 was $26.8bn. Although it has been made a merger of equals, AOL shareholders were given 55 per cent of the new company to Time Warner's 45 per cent, giving them effective control of the new company (Barkham, 2000). The merger in a stock swap valued at $350 billion was finalised on January 11, 2001, one year after it has been announced. The delay was due to the approving by the European Commission, The Federal Trade Commission and the Federal Communications Commission (Mediachannel, 2002). Together they now own magazines such as Time and Sports Illustrated, television properties like CNN, Internet services and products like AOL, CompuServe and CNN.com, the Warner Music Group, the Warner Bros. and New Line Cinema movie studios and Warner Bros. Stores (Wilen, 2001).
- Quote paper
- Torsten Teering (Author), 2002, AOL-Time Warner - The end of democracy?, Munich, GRIN Verlag, https://www.grin.com/document/8863