HOT TOPIC: AOL-TIME WARNER MERGER
with Shannon Henry
2:30 p.m. EST: Tuesday, January 11, 2000
Just a few years ago, AOL was an upstart Internet company battling for survival. On Monday, it bought Time Warner in the biggest merger in history, one that is expected to spark a new wave of mega-media mergers.
What does the $183 billion deal between new media and old mean for the companies, the Northern Virginia tech corridor and the future of broadband? What about the people involved: Steve Case, Gerald Levin, Ted Turner and Bob Pittman? Post columnist Shannon Henry was live to answer your questions.
See below for today's transcript.
Shannon Henry: Hi, Welcome to the discussion, where you will have explained to you the largest merger of all time. Just kidding. Anybody who says he or she knows EXACTLY what a deal like this will mean is lying, or delusional. I hope to answer a few questions and invite you also to comment on the deal. What do you think it means? And I'll also point you right now to our extensive coverage of AOL-Time Warner in today's paper. We have 15 stories, and even some humor on the subject.
The merger proposes to move AOL headquarters to NY. How will this affect the offices in VA?
Moreover, with the merger being set with Time Warner's share at $97, why would the market sell Time Warner and push its price down to $85 from yesterday's high of $102? Is it possible that the merger is rejected by both companies' stockholders?
Shannon Henry: The headquarters question was a big one as we were covering the news yesterday. If the deal goes through, AOL Time Warner will be headquartered in New York. So it's bittersweet for Washington as a tech sector: A local company in the biggest merger of all time, but it ceases to be a local company. The Dulles office, which has 3,000 of AOL's 12,000 employees, will still be a force in the local economy.
Yes, the merger could be rejected. It's not a done deal.
If this deal is so great, in terms of its potential, why is the public showing so little favour for the AOL stock?
Shannon Henry: It's normal for the company in the buying position of a merger to see its stock price fall following the announcement. But there's something more at play here. AOL investors understand that the company they have invested in will no longer be an "Internet" company. New media companies like AOL grow faster than old media. Now that this is a merger of the old and new, it's a different model. It'll be fascinating to see how the market continues to value such a new breed.
It's a new century. Out with the old. In with the old. I hope that Steve Case doesn't get pushed-out of the company.
Shannon Henry: I'm sure Steve would appreciate your concern! After years of being told he was wrong and succeeding despite constant obstacles, I think of yesterday as Case's crowning glory. The guy won. But it's also clear that he will not have the day-to-day operational responsibility of AOL Time Warner. In fact, Bob Pittman has long held that role at AOL. Case will continue in his big-picture thinking type role. How much Pittman-a former Time Warner exec himself-takes on will be interesting. He's being talked about these days as the heir apparent.
Queens Co., N.Y.:
Is anyone concerned about the concentration of various media being in the hands of just a few large corporations? We already have major broadcast newtworks owned by large companies. This merger is accelerating that trend.
Shannon Henry: It's of great concern. Several consumer groups yesterday said they worried about too much of our information coming from one single mega-conglomerate. Media watchers also worry that it will be difficult for a news organization to objectively report on its parent company. The lines continue to blur. I'd love to hear from readers, what do you think?
Do you think this merger will have a negative overall effect on AOL because it is moving from a true internet company to a media conglomerate?
Shannon Henry: AOL co-founder Jim Kimsey once said that the bigger the boat gets the harder it is to turn around. This company will never again be a start-up that can move at lightning speed. But it also has more power than its competitors. Maybe AOL will make old media move faster. Some say that's already happening.
I don't understand why many of the people are unhappy about this, isn't it a good deal?
Shannon Henry: Most mergers fail, in some way. People are awed by the deal, excited by the deal, but wonder if it will make AOL better and Time Warner better or just mush them together. I think it also hit people that one company would control so much: CNN, Time, AOL, Netscape, MapQuest, ICQ, Bugs Bunny. As AOL promotes its "AOL Anywhere" strategy, which includes giving you real time info on your palm pilot (AOL owns a bit of Palm, too) or TV, or cell phone it also made people think what will they NOT own in our future?
Is it possible that some of the media's interest is due to the air tightness of this story prior to yesterday's announcement??
Shannon Henry: They did keep it really quiet. But it's the biggest deal ever, c'mon! Do you think the Post overcovered it? Or the Times or Journal?
I have often commented on the fact that with world news being controlled by US and British news sources the public often does not get a fair representation of world events. Also, the content is very biased towards US and so called human interest stories that do nothing to educate the public on world affairs...the main culprit of this type of news is CNN World Report that does nothing for reporting on true world events -with minor exceptions-. Will AOL affect this in any way by bringing world internet news sources into CNN and the like?
Shannon Henry: You can be sure people will watch to see if coverage changes. But AOL says it will not interfere with editorial decisions. BTW, Time Warner is MUCH better known internationally than AOL.
Is Post-Newsweek acquisition bait?
Shannon Henry: After the story broke yesterday, people at news organizations all over the world wondered if they'd be bought next, and by whom.
The Washington Post Co. would only be acquired if the Graham family approved it.
Shannon, I hear rumblings of anti-trust interests in the merger. Im sure it will get a thorough scrubbing by govt watchdogs but what's the story today? Anything new?
Shannon Henry: Whether AOL could be the next Microsoft is indeed one of the bigger questions of the day. Regulators will look closely at this merger. Our reporters on that angle of the story didn't see a major stumbling block, but it's too soon to tell. Stay tuned.
How will the new AOL shuffle its employees. If they are not moving everyone to New York, just how many people -and what types of jobs- do they plan to keep in Dulles.
Shannon Henry: AOL says it will not only keep its 3,000 employees in Dulles, but it will likely hire more. Steve Case will stay in Virginia. Bob Pittman, who was a New Yorker before he came to the area, already has a residence in NY, and will split his time between New York and Washington. Unlike the Netscape merger, AOL says layoffs are "unlikely."
I have to say that I am extremely tired of all the internet and e-commerce hype that is currently going on these days, especially the hype over this merger -whose value is exceedingly questionable in my mind-. My wife and I barely use the internet as it is, preferring activities like exercise and face-to-face socializing. In fact, the only time I ever use it lately is to read the Washington Post during my weekday lunch break. To be honest, I wouldn't even do that if you charged for the service.
In your opinion, are my wife and I in the minority these days or is all this hype just that?
Shannon Henry: A great point. There is indeed a whole part of our society not on the Internet. It's particularly appropriate in today's discussion because what AOL is now doing is trying to move beyond being an Internet company, to a media company. If you don't want to be on the Internet, it'll give you your information through your TV. Or refrigerator (not a joke).
It's hard to say this without sounding like hype, but I think the Internet is now changing our lives. The hype will go away and the Internet will just be part of our lives, like electricity.
there are rumblings up here that, because Time Warner supplies a huge amount of the cable TV in the city, that a local regulatory body in NYC could actually kill approval of the merger. The idea being that AOL would have nearly unlimited access to high speed cable connections in such a large and populous area, and other companies would have a difficult time matching the market share. Any thoughts on this or whispers that you've heard about this possibility?
Shannon Henry: Hadn't heard that. But thanks for the tip, I'll pass it on.
What affect -threat??- does this mega monopoly pose for freedom of expression
Shannon Henry: It's a great question, because the Internet lets people who we might otherwise not hear from voice their opinions, even in venues like this. Our style section had a good piece today on the cultural aspects of the deal, reminding us that the sage who said "information wants to be free" also said "information wants to be expensive."
how does caps owner ted leonsis fit in
Shannon Henry: Ted is one of the signs that AOL will always have ties to Washington. He's not likely to go to New York. The guy does not sit still, though, so I'd look out for news about new projects for him soon.
Shannon Henry: So sorry I couldn't get to all the questions. There were so many good ones. Thnx. for writing.
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