Mergers & Disquisitions.

• Author: Gillespie, Nick
• Position: America Online and Time Warner merger

Reasons not to sweat AOL-Time Warner--and other megadeals

When America Online and Time Warner announced merger plans earlier this year, one of the most vocal reactions was also one of the most predictable: basso profundo bellowings about increasingly "corporatized media" that threaten "historic notions of a free, diverse, and independent press"; a virtual monopoly of media ownership"; and the imminent creation of a "free-enterprise equivalent of a Ministry of Culture."

These worries are, unsurprisingly, most pronounced on the left, but foes of Bigness across the political spectrum share similar concerns. Let's give such fear-mongering its due: It made it that much easier to ignore Ted Turner's groan-inducing exercise in rumble-seat nostalgia. The Time Warner vice chairman proclaimed that he approached the deal "with as much or more excitement and enthusiasm as...when I first made love some 42 years ago.

But jeremiads against "media-merger mania are fundamentally misplaced and mistaken--and for reasons that range far beyond the AOL-Time Warner deal (not to mention Time Warner's subsequent merger with EMI). Such concerns reflect a basic misunderstanding of how the economy actually functions. Forget about media monopolies or a market-based Ministry of Culture, whatever that might mean. Assuming the merger passes government regulators' smell test (and by all accounts it will) we can look forward to a $350 billion megacorporation that grovels even more abjectly for customers than AOL and Time Warner do now as separate entities.

Indeed, if AOL's own corporate history is any guide, far from offering slimmer and slimmer pickings to an increasingly captive and dissatisfied audience, "AOL Time Warner" will be pathetically desperate to deliver more and more stuff at better and better prices to restless and demanding subscribers. Today's "250 Hours Free!" on AOL and $40 "special discount" subscriptions to Time will seem positively stingy by comparison.

That's not to say the anticonglomeratization crowd has gotten it all wrong. Like the critics, I don't doubt that AOL and Time Warner are hellbent on nothing short of absolute global media domination. As a longtime AOL subscriber (since 1993) who is also currently under the thumb of a Time Warner cable franchise, I can testify from personal experience that neither company seems overly concerned with customer service out of a sense of altruism. Despite Time Warner CEO Gerald Levin's testimony at a press...