Call it the greening of the Internet.
If you had told me a year ago that an online service would buy one of the largest media conglomerates in the world, I would have put that one in the same category as finding the Brooklyn Bridge up for auction on eBay.
Yet here we have the blockbuster deal between America Online and Time-Warner. It's one of those "Holy S---!!!" stories. These two leading lights from the worlds of old media and the Internet will join forces in a union that will surely send huge waves rolling through their respective industries.
My guess is that this deal will convince Yahoo!, Lycos and the rest of the major Net portal players of the urgency to look around for other big media conglomerates.
And now that Time Warner has leaped first, its immediate competitors should be similarly willing to join the fray when the right offer comes along. The big fear is that by doing nothing, they'll remain stuck at the station while Time Warner whistles by.
Time Warner's second chance
There was much hyperventilating during the Monday press conference announcing the deal. Time Warner chairman Gerald Levin led the cheerleading, claiming that the deal represents the digital transformation of the company.
All understandable, of course, although this isn't the first time the folks at Henry Luce's former stomping ground have tried their hands at cyber stuff.
Time Warner, a company with fantastic individual media properties, poured millions of dollars into that mid-1990s effort but just couldn't figure out how to transfer that amazing brand equity from the world of print to the Internet.
Now it can let AOL worry about that.
The newly constituted AOL Time Warner Inc. -- "The New Evil Empire" might make a more fitting moniker -- will own the best portfolio of Internet content and product destination sites around.
What's more, it will own an incredible distribution network via its nationwide cable network. This one should be a no-brainer for the sales side to pitch to advertisers still bewildered over where to spend their "dotcom" budgets.
It's all about convergence
This is surely a very big idea -- not the least because it points to the convergence of media and the Internet. Rational people may still scratch their heads at the sky-high P/E ratios attached to so many Internet companies. (Prior to the deal, AOL's market cap was amazingly twice as large as that of Time Warner!)
But this deal could go a long way toward putting a lid on that discussion, at least as far as blue-chip cyber companies are concerned.
Investors had been wondering how AOL was going to get into broadband. Chairman and CEO Steve Case devoted major time in the last year testifying why the government needed to force cable companies -- namely, AT&T -- to open their cable lines to others ... such as AOL, of course.
Yes, the company had a deal to make its AOL-Plus available through the Direct PC satellite controlled by GM's Hughes Electronics. And then there was DSL, but AOL clearly coveted a way to gain broadband access.
All those questions get put to rest by the Time Warner deal, which offers AOL 13 million cable subscribers in one fell swoop.
The net effect is to push the open access debate back into the private sector where it belongs. I suspect that when Case visits Washington this year, he'll spend more time frequenting Duke Zeibert's steakhouse than whining to the hired help on Capitol Hill.
Internet imploding? Hardly
Don't forget that the currently constituted AOL isn't even 10 years old, really. And it was, at one time, considered an also-ran.
Now AOL is the one taking over one of the biggest and most respected media companies of all time. Perhaps even more remarkably, that media company is willingly heading into AOL's arms.
And all of this takes place when a lot of savvy observers believed the Internet was about to implode -- again.
Instead, it may be the beginning of another meteoric takeoff.
Beyond the immediate day-to-day, however, there's the feeling that this merger constitutes a signpost of sorts.
It also says something about the changing landscape.
