Originally created 01/12/00

The mega-merger



The mega-merger between media giant Time Warner and America Online, the nation's largest Internet service provider, is being characterized as New Media supplanting Old Media -- particularly since AOL, a relative baby, is buying out granddaddy Time War-ner, with roots dating back to 1923.

If nothing else, the $162 billion buy-out proves the Internet isn't just a place for small techno-savvy entrepreneur-ial start-ups and overnight millionaires -- it's big business; humongous business, in fact. If the mega-merger goes through, AOL-Time Warner will be the largest corporation in the world with an estimated market value of $350 billion.

AOL is one of only a handful of Internet firms that actually makes money -- $762 million last year. It brings to the merger a clutch of Web companies, like CompuServe and Netscape, and 20 million online subscribers.

Time Warner brings what the voracious Internet needs so badly -- good stuff to put on it: Warner Bros. movies, HBO, music and TV shows; CNN; Time, People and Sports Illustrated magazines.

As one expert describes it, the new company brings together "a sort of unified field theory of communications where communications, news, entertainment, information, advice come cascading through a single screen as easy to use as a television."

AOL chief Steve Case and Time Warner boss Gerald Levin say their mega-merger will be great for consumers. Of course, that's how any merger should be judged. But saying so doesn't make it so.

The largest merger ever is also perhaps the most complicated. Before it goes through, the government's antitrust lawyers must do their job -- scrutinize it thoroughly before giving it a green light. Don't just take Case's and Levin's word for it.

History teaches that bigness is not always goodness.

AOL chief Steve Case and Time Warner boss Gerald Levin say their mega-merger will be great for consumers. Of course, that's how any merger should be judged. But saying so doesn't make it so.