Luce Change
Yes, the GOP presidential candidates debated again last night, and yes, a
Florida judge at least momentarily delayed the return of Elián González to
Cuba, and yes, the Supreme Court says Microsoft has to let its temp workers in
on its good-deal stock purchase plan, but everybody leads with yesterday's
surprise announcement of AOL's purchase of Time Warner, the first acquisition
of an old media company (co-founded 75 years ago by Henry Luce) by a new media
one (only 15 years old), the largest media merger of all time, and indeed, the
just-plain largest merger of all time. Although there isn't complete agreement
about how large: The Washington Post says the purchase value of the stock is
$183 billion. The New York Times
says $165 billion. The Los Angeles Times says $163 billion. USA Today
says $160 billion. And the Wall Street Journal says $156 billion. The NYT says
the deal will produce the fourth-most-valuable company in the country, one with
a stock market value "roughly equal to the gross domestic product of Mexico."
(Next week's big story: "AOL TIME WARNER DOUBLES SIZE, ACQUIRES MEXICO.")
The coverage agrees on the basic logic of the deal: In one swell foop, TW
gets a tremendous Internet presence for marketing, for instance, its books and
CDs; AOL gets a wide range of content in the form of TW's many media
properties, ranging from HBO to CNN to Time magazine; and AOL goes from
having no broadband capability to being positioned to go into computers in the
homes wired by the nation's No. 2 high-speed cable provider, Road Runner, which
TW is the half-owner of. The papers say that there now will be a spate of other
old-new media merger deals, so that rival companies can compete against this
newly integrated juggernaut.
The WP points out that AOL has only one-fifth the revenue of TW, but
it was able to handle the deal because it has four times as much profit and a
much higher stock value. The papers all reflect a sense that nonetheless it was
surprising to think that the young company was buying the old one instead of
vice versa.
As is typical of press coverage of mergers, breathlessness is the order of
the day. The LAT runs at least eight stories on the deal, the NYT
at least 12. USAT goes with special reports in each of its four
sections. Its front-page "cover story" compares the deal to the American
colonies' defeat of the British. The LAT seems completely out of step
when it bothers to point out that because of the debt the new company will take
on to seal the deal, it could be decades before it reports a profit.
Several papers take a crack at turning the spreadsheet into a novel,
centering on the characters of AOL's Steve Case, who will be the chairman of
the new company and TW's Gerald Levin, who will be its CEO, with the WP
putting the most effort into it. The Post 's tale includes Levin's
decision-making "walk in the woods" and the code words and letters used to keep
doings confidential. Case gets the papers' instant cult of personality
treatment: Everybody notes that he likes casual clothes (although he wore a
suit to the press conference and it was Levin who showed up all caj and
tieless) and used to be a Pizza Hut topping designer.
Today's expert on a stick is one Robert McChesney, a professor at the
University of Illinois and the author of a book about media mergers. He's
quoted in two different WP front-pagers and by the LAT . Although
to be fair, if he weren't quoted there would hardly be any doubts raised in the
dailies at all about the wonderful wonderfullitude of it all. He thinks the
deal is bad for freedom of expression. The WP 's media reporter Howard Kurtz also takes a crack at the threat the deal
poses to independent journalism, creating as it does more financial
relationships between reporters and institutions they might be covering. His
column ends with the credit line: "Howard Kurtz appears on CNN's weekly media
program."
