"The TV business ... is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free and good men die like dogs."-- Hunter S. Thompson
Have you ever seen the movie Highlander? Released in 1986 staring Christopher Lambert and Sean Connery, Highlander was about a race of immortals who walked the earth and fought each other through the ages. The mantra throughout the film was, " There can be only one!" This meant that at some point in time, all the remaining Highlander immortals would gather together and fight each other until only one stood. In order to kill an immortal, however, you must chop off his head. The goal of all this combat and decapitation was to be the one to obtain "The Prize," which would make the last immortal standing a kind of "superman type." It's a pretty cool movie if you haven't seen it (especially on DVD widescreen). When thinking about the recent flood of mergers and acquisitions in the world of television media, it is eerily similar to immortals trying to chop each other's heads off.
In 1989, when Time Inc. announced it would purchase Warner Communications for $15.11 billion, the new company seemed so massive that nothing would be able to grow bigger. Six years later, Walt Disney merged with Capital Cities/ABC in an $18.28 billion deal. Once again, the Disney merger was heralded as the largest media merger in history. In December, 1998, the U.S. Justice Department approved the $40 billion merger between the telecommunications colossus AT&T and TCI, the nation's second largest cable television owner. Then, in September 1999, Viacom bought CBS for $34.9 billion. The new Viacom-CBS was estimated to be worth $80 billion.
The biggest so far, however, is the merger of America Online and
Time Warner which was announced in early January, 2000. AOL purchased
Time Warner for $160 billion in stock making it the largest media
conglomerate . . . . so far.
"This is not just about big business. This is not just about money," said Time Warner chairman Gerald Levin. "This is about making a better world for people because we now have the technology and the instruments to do that." In other words, he wants to take over the world. Nice. According to the Time Warner web site, the combined value of the new company is $350 billion. If you want to take over the world, you're gonna need money.
Obviously, AOL Time Warner Inc. IS about big business and IS about money. Immortals don't chop each other's heads off because they have nothing else to do. They are all after "The Prize." Y'know . . . world domination.
AOL is the biggest Internet company and Time Warner owns 24 book companies; HBO; Cinemax; half of Comedy Central (ironically, Viacom owns the other half); CNN; New York City Cable Group (1.1 million subscribers); Warner Bros.; the WB Television Network; Castle Rock Entertainment; roughly 35 major magazines; dozens of music labels; New Line Cinema; and many other communication and media outlets.
Mergermania is about the largest media companies fusing with other large media companies to form absolutely huge media companies. Next on the list could be NBC as it tries to invest $415 million in Paxson Communications Corp. which is the largest U.S. TV station operator. If NBC eventually takes control of Paxson, it could control 40 percent of the U.S. viewing public.
Though not as large as the U.S. market, in the United Kingdom,
Carlton Communications and United News & Media merged in
November, 1999 to form the largest commercial TV network in that
country. This new conglomerate will challenge Rupert Murdoch's
British Sky Broadcasting (BSkyB) for market dominance in the UK. In
February, 2000, BSkyB announced it will invest 250 million pounds
($400 million) into communications ventures tied to the Internet and
cellular phones.
Murdoch's News Corp., which owns Fox Broadcasting as well as BSkyB, has an estimated value of $20 billion. However, in a world of media mergers and takeovers, Murdoch has warned that not even his company is safe. "I have to work harder than ever to have my values recognized by the market, so that we don't become a breakfast snack for these other big companies," said Murdoch.
"The world has changed totally since the AOL/Time Warner takeover," Murdoch told Fox News. "A lot of us used to be big fish in a small pond, now we are all minnows there, with two huge sharks," he said in reference to AOL and Microsoft. "We are looking at every section of our company to get it into this new media or digital age - - we have to."
The limits to Mergermania are only controlled by how much money there exists in the marketplace. If the market can take more media mergers, then the companies will keep going. Who loses in this type of environment is the consumer. Choice suffers. If all media is a monopoly then what kind of freedom of speech and expression can the consumer reasonably expect?
In the United States, mergers and buyouts are supposed to be monitored by the Federal Communications Commission (FCC). With weak laws in place, the FCC has not done much to ensure that consumer choice is preserved in the media marketplace. Statements by FCC Chairman William E. Kennard seem to indicate that the agency is pleased with doing nothing and letting the multinationals take control. Commenting on the AOL-Time Warner deal, Kennard stated, "I think it is encouraging," and still believes "that the marketplace can and should and will ultimately" resolve the issue in favor of consumers. In other words, let the "invisible hand" of the marketplace guide media companies. Only, shouldn't the FCC consider the effect massive mergers will have on other parts of the economy? Such as small businesses or non-profits.
FCC Commissioner Gloria Tristani seems to realize what will happen
in the future. In a statement released on January 14, 2000, Tristani
noted that "46 of the top 50 cable networks are owned by twelve
large media conglomerates - ABC/Disney, General Electric, CBS,
News Corp, Time Warner, Viacom, Discovery, Rainbow Media, Liberty
Media, USA Networks, E.W. Scripps and Comcast. (Two of these twelve
entities, CBS and Viacom, have proposed to merge, which would leave
only eleven.) And two of the remaining four services are C-Span and
C-Span2, which are funded almost exclusively by the cable industry.
More disturbing, these same entities also control the top commercial
television broadcast networks, dozens of television stations and
lesser cable networks, many of the major movie, TV and video
production studios, and even the country's largest video rental
distributor. Thus, to a significant extent, the video programming
that the American public receives is being funneled through a handful
of media gatekeepers (not to mention the vast magazine, newspaper,
publishing and Internet properties owned by these
entities)."
The reality, as seen by Tristani, is that "these potential bottlenecks should be a concern of all those who care about true competition and the clashing of opinion that is so vital to our democracy. How information is presented and what stories are covered on television - and, often more important, what stories are not covered - has a significant impact on public perceptions and the discussion of public issues. More channels do not necessarily mean that additional views are being expressed. More channels often just mean that the same voices can express their views over and over again."
This view is shared by the International Federation of Journalists (IFJ) who warned that the AOL-Time Warner deal would restrict the flow of information and free speech. "We are now seeing the dominance of a handful of companies controlling information and how that information reaches people. Unless action is taken to ensure journalistic independence we face a dangerous threat to media diversity," said the IFJ in a statement.
The big companies will keep getting bigger with the government looking on passively. The electronic media Mergermania is a snowball rolling down a snow covered hill. The rolling snowball keeps picking up more snow as it rolls so it gets bigger and bigger, crushing anything in its path. This is not the way a healthy economy should work. A free market economy should be monitored by government to ensure safe and fair competition. The U.S. Justice Department has attacked Microsoft as a monopoly because of fears that smaller computer companies were getting pushed out and crushed. Yet, television and cable companies are given free reign.
The true meaning behind massive media mergers was revealed by Bob Pittman, CEO of AOL, after his company merged. "We believe that AOL Time Warner will provide companies worldwide with a convenient, one-stop way to put advertising and commerce online as well as take advantage of the best in traditional marketing," said Pittman.
The goal is no choice. The prize is no competition. The purpose is to collect money. The vision is world dominance. Welcome to Mergermania 2000.
Copyright 2000 by Ron Kaufman.
