Media Mergers

At the beginning of the 21^st century, we have been amazed at the number of mergers- phone companies (ATT and Cincular) retailing (Sears and K-Mart) and media- AOL buying out Time-Warner. The latter is of special interest: " The AOL buyout of Time Warner takes the largest online service provider (AOL) with 20 million subscribers and joins it with the world's largest media company. AOL's Internet access is slow, so it needs Time Warner for the latter's vast cable networks which go out to 13 million subscribers and will be able to deliver broadband access to appliances such as desktop computers, TV sets, and handheld devices. AOL also needs the content that Time Warner provides through its publishing empire of magazines, books, and other media. Indeed, AOL seeks to control not only the way future subscribers will access the Internet, but the content that people will desire as well" (Anon. 44). As most students of business k now, AOL-Time/Warner is just now beginning to pull out of severe financial doldrums. Bu5t the real problem of multi-media mergers is not the bottom line, as members of Congress and others concerned about the spread of mergers and acquisitions now state: "Unfortunately, these changes in the structure of the media may pose dangers for democracy. First, media that serve broad audiences are losing ground to niche outlets. Many Americans now communicate only with people who have similar interests and political outlooks. Social scientists have shown that this echo-chamber effect reinforces and amplifies preexisting points of view, making compromise -- the essence of a workable democracy -- harder than ever to achieve": (Anon 104).

We have already seen that there are powerful political forces at work in acquiring more and more radio and TV and newspaper facilities. Fox News, owned by ultra-conservative Rupert Murdoch is literally the voice of the Bush administration, and seems to make no bones about it. "Concentration of media power in too few hands not only can lead to higher prices for consumers but can hurt variety and quality of programming. It raises the temptation for owners to impose their views on a public with fewer alternatives. And cash-poor independent voices may have trouble getting into vast proprietary networks. Wondered John McCain at a Congressional hearing: "When is the endpoint to all of this? Why not have Rupert Murdoch buy another company, then Comcast another, and on it goes. At some point, you'll have many voices -- and one ventriloquist" (Lowy 34). The concern of many Congressmen and Senators is that the FCC is weakening against the powerful conglomerates: "The FCC is now falling into the hands of the worlds largest media conglomerates: AOL/Time Warner, AT&T Corporation, Bertelsmann, General Electric, Liberty Media Corporation, News Corporation, Sony, Viacom, Inc., Vivendi Universal, and the Walt Disney Company. Even though these companies are the biggest, don't be fooled that they are competing against each other. They are actually tied together closer than ever. For example, AT&T owns part of News Corp. and Liberty Media owns parts of Time Warner, Viacom, Vivendi and News Corp.; Warner Brothers, HBO and Cinemax are owned by AT&T and AOL/Time Warner; Comedy Central is owned by AOL/Time Warner, AT&T and Viacom; and E! Entertainment and Style Channel are owned by AOL/Time Warner, Liberty Media, Disney and Comcast" (Kaufman 2). While some of the public may not care who controls their TV and radio stations, there are far too many prominent legislators and "watch dogs" that are very concerned. We are not even certain just how profitable the new combinations may be. Even as a multi-million dollar lobbying campaign is trying to maintain the pro-business attitudes of the current administration, we ought to be concerned whether we will be tainted by the same brush as the conglomerates, and if that will hurt this company's public image. We need to see and decide if it would be in our best interests to participate, or to sit quietly on the sidelines and reap whatever benefits may accrue without being targeted. My suggestion: Do nothing. A new FCC chairman will be appointed soon, and what strength or weakness he brings to the table merits our wait-and-see attitude.

REFERENCES:

Kaufman, Ron (2003) "Mergermania 2003"

www.turnoffyourtv.com/networks/mergermania2003.html

Lowy, Tom: "Mega-Mergers: How Dangerous?" Business Week,

Feb. 23, 2004

No author listed: "Communications Giants Slug it Out"

Microwaves & RF v. 39 no. 3 (March 2000)

No author listed: "The Dangers of Media Mergers"

Business Week, July 12, 2004