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Invasion of the Mega-Media-Merger Snatchers

By Sharon Waxman
Washington Post Staff Writer
Tuesday, January 11, 2000; Page C08

LOS ANGELES, Jan. 10 –– It's a warm day in January when Hollywood feels humbled by anything, so suffice it to say that people were sweating profusely around this town today at news of the AOL-Time Warner merger.

"You rarely find me at a loss for words," fumbled Tom Rothman, president of 20th Century Fox Film Group, at hearing the news. The studio is part of the Rupert Murdoch-owned NewsCorp monolith, which includes newspapers, a television network, a TV production house, a sports team and more. "Astounding. Is there ever a point where bigger isn't better?"

Answer: Definitely not.

The head of one major movie studio, who didn't want to be named, retreated to Hollywood's purest emotion, jealousy:

"Lucky them. My reaction was the same as every other company in the world: Boy, do we feel small. Everybody I talk to says the same thing. We all feel little."

"It changes the landscape of all our businesses. It's what the future is," sighed another chief executive, who runs theme parks and a movie studio. "It sure feels like you need to be bigger--bigger yet."

Bigger is the password. Because let's face it: What are a few $100 million budget movies, or even a couple of billion-dollar mergers, compared with a $183 billion deal to join a multimedia behemoth to an online Gargantua? (We're running out of outsize adjectives here.)

Up to now, Internet ventures in Hollywood have been limited to quaint Web sites and mincing e-commerce, like Pop.com, a to-be-launched entertainment site planned by DreamWorks and Microsoft co-founder Paul Allen.

Forget about that stuff.

Moreover, the fall mega-deal between Viacom (which owns Paramount, Blockbuster, Nickelodeon and other outlets) and CBS was oldthink, the stuff of yesterday's news, went the gossip. Newthink--that's the Internet. And step on it.

In the time it takes to dial a cell phone, the talk around Hollywood was of a domino effect. The mega-mega-merger seemed destined to be the first in a series joining cash-flush Silicon Valley with the content that movies, television programs and news shows provide.

"It's mind-boggling," said Cassian Elwes, who heads the independent film division of William Morris Agency. Except that independent films aren't very independent anymore. Fine Line and New Line studios, for example, now belong to Time Warner and, as of today, AOL. "I would think this would set off a merger mania."

Said Variety editor Peter Bart: "The pressure to do so is extraordinary." As of when? "As of a couple months ago, when the AOL cloud began to loom over Time Warner. But certainly since this morning."

There used to be a joke around town about how AOL had more cash than Time Warner, noted Anita Busch, editor of the Hollywood Reporter. As if AOL could compete with the entertainment conglomerate, went the joke. Not so funny anymore, she observed.

"The interesting thing for film and TV people is they realize they are small cogs in these vast leviathans," said Bart. "There's such an egocentricity in Hollywood, that the biggest news is that the people in this town feel small."

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© 2000 The Washington Post Company

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