Any doubts that the Internet economy has taken over the economy as a whole vanished on January 10th, when we watched AOL's Steve Case embrace Time Warner's Gerald Levin. The deal is an amazing one: AOL, which was a relatively small company only a few years ago, is swallowing a media giant.
Time Warner is the nation's largest magazine publisher and a is leading producer of movies, music, and television, owning Warner Brothers, the WB Network, CNN, HBO, TBS, and much more. Just as important to AOL is the fact that Time Warner is the nation's second-largest cable provider, with a dominant position in cable access in most of the markets it serves. This deal will make it much easier for those 13 million cable subscribers to get AOL over cable.
This megadeal follows others in which AOL acquired ICQ, the leader in Internet messaging; Netscape, the leading browser vendor at the time; and CompuServe, another grand old online brand. As a result, AOL became the leading provider of Internet access, pioneering $400 rebates on computers for customers ready to make three-year Internet-access commitments.
Give AOL lots of credit: While the techies scoffed, it focused on access for mainstream consumers, and this worked: AOL now has 20 million subscribers, an order of magnitude above any other provider.
The deal will let AOL use content from the Time Warner media properties and gain access through Time Warner cable; the merger probably presages other combinations of tech companies and media giants we'll see in the months ahead. As consumers, we need to insist that the new AOL Time Warner continue to push for open access to content and services from all providers, something AOL has long advocated but that Time Warner has opposed. To the extent that this merger moves content forward into the Internet era and extends high-speed communications to more people, it should provide huge momentum for the broadband world to come.
