“It was then, and is now, the largest merger in American business history,” notes Tim Arango of the New York Times about the AOL-Time Warner mega-merger, which happen ten years this month. And yet, as he points out in his essay, “How the AOL-Time Warner Merger Went So Wrong,” things didn’t end up going so well for this marriage:
The trail of despair in subsequent years included countless job losses, the decimation of retirement accounts, investigations by the Securities and Exchange Commission and the Justice Department, and countless executive upheavals. Today, the combined values of the companies, which have been separated, is about one-seventh of their worth on the day of the merger.
To call the transaction the worst in history, as it is now taught in business schools, does not begin to tell the story of how some of the brightest minds in technology and media collaborated to produce a deal now regarded by many as a colossal mistake.
Arango goes on to interview several of the principals involved in the deal to get their take on why things unfolded so miserably and, ultimately, came to an end this year. I highly recommend the essay because it should serve as a cautionary tale to those worrywarts who are constantly predicting that the sky is going to fall if we allow a truly free media marketplace–including freedom for firms to structure themselves as they wish. Reality usually plays out quite differently. As I argued in my recent paper, “A Brief History of Media Merger Hysteria: From AOL-Time Warner to Comcast-NBC,”
The point here is not that media mergers are inherently good or always make sense. Indeed.. mergers sometimes prove to be huge blunders. But the hysteria sometimes heard before media mergers are consummated rarely bears any relationship to reality once the deals move forward. Media markets are extremely dynamic and prone to disruptive change and technological leap-frogging. Mergers are often one response to that turbulence… Given how difficult it is to predict the future course of events in this chaotic sector, humility—not hubris—is the sensible disposition when it comes to media merger policy.
Free Press and other public advocacy groups are sending letters Monday to the Justice Department and the Federal Trade Commission calling for a probe of the “TV Everywhere” plan by cable, satellite and phone companies that brings television shows and movies to computers and devices, but only for those that subscribe to both television and high-speed Internet services.
Think about this. “TV Everywhere” is still in its cradle, having only just been launched recently. It will give multichannel video distributors a chance to find their footing as millions of consumers continue to “cut the video cord.” And it would provide consumers with ubiquitous access to content over the Internet while also ensuring that content creators are compensated for their programming.
OK, so what’s wrong with all this again? Why would we want federal antitrust officials throw a wrecking ball into this innovative new business model? Continue reading →
It really is amazing how much the audio marketplace has evolved over the past decade. I’ve written about the growing “competition for our ears” here before, but over at the Radio Survivorblog, there’s an outstanding collection of essays about “The Decade’s Most Important Radio Trends” by several long-time industry experts. Dennis Haarsager of National Public Radio has a nice listing of all the entries over on his blog, which I have reproduced down below.
It just blows my mind to think that just 10 years ago I didn’t have satellite radio (now have 3 subscriptions); I didn’t have Pandora (my 8 different personalized channels are playing in the background on my computer non-stop); I had never heard a podcast (and now subscribe to several and have hosted one here on occasion); I didn’t have an MP3 player and had never burned any of my music (now have 3 players and my entire 25-year collection of CDs on all 3 devices); and I had never spent any time listening to music online (and now am quite in love with Lala and LastFM). Meanwhile, I am still listening to the old fashion radio quite a bit, including on a new HD Radio player in my house. You gotta love choice like that!
Anyway, read these essays for a fuller investigation into the state of the audio marketplace. I don’t agree with everything said in each of the entries but still recommend you check out the entire series:
OK, now that the television industry has admitted it, I guess I finally can, too: Hulu, far from being the key to “cable freedom” is just another evil plot by an evil industry to control us all—with the help of mind-bending advertising, of course!
Yes, I know this commercial aired on last year‘s Super Bowl. I’m behind the times… I still remember when Alex Baldwin was thin!
With the advent of new technology, newspapers are being threatened. Many are expected to go out of business, and the rest will have to change substantially. Many observers fear that journalism will become too driven by speed, and that judgment and deliberation will be lost. Others said that news reporting would be devalued and only those providing analysis and opinion would survivie. Worst of all, worries that the new technology will lead to a monopoly over information.
A description of the dire situation faced by newspapers today as they face the Internet? No. These are the concerns expressed in the 1840s as the telegraph transformed the news business. This week’s Economist tells the story of how Samuel Morse’s invention was thought to signal the death knell for newspapers, and to thoughtful journalism.
As it turned out, the news business was tranformed. But not in the ways many feared. With faster communications, the quality of news, and of the information Americans received, improved. Newspapers had to adapt, but survived and even prospered. And no one ever created a monopoly over information.
I’ve always generally agreed with the conventional wisdom about micropayments as a method of funding online content or services: Namely, they won’t work. Clay Shirky, Tim Lee, and many others have made the case that micropayments face numerous obstacles to widespread adoption. The primary issue seems to be the “mental transaction cost” problem: People don’t want to be diverted–even for just a few seconds–from what they are doing to pay a fee, no matter how small. [That is why advertising continues to be the primary monetization engine of the Internet and digital services.]
That being said, I keep finding examples of how micropayments do work in some contexts and it has kept me wondering if there’s still a chance for micropayments to work in other contexts (like funding media content). For example, I mentioned here before how shocked I was when I went back and looked at my eBay transactions for the past couple of years and realized how many “small-dollar” purchases I had made via PayPal (mostly dumb stickers and other little trinkets). And the micropayment model also seems to be doing reasonably well in the online music world. In January 2009, Apple reported that the iTunes Music Store had sold over 6 billion tracks.
And then there are mobile application stores. Just recently I picked up a Droid and I’ve been taking advantage of the rapidly growing Android marketplace, which recently hit the 20,000 apps mark. Like Apple’s 100,000-strong App Store, there’s a nice mix of paid and free apps, and even though I’m downloading mostly freebies, I’ve started buying more paid apps. Many of them are “upsells” from free apps I downloaded. In most cases, they are just 99 cents. A few examples of paid apps I’ve downloaded or considered buying: Stocks Pro, Mortgage Calc Pro, Currency Guide, Photo Vault, Weather Bug Elite, and Find My Phone. And there are all sorts of games, clocks, calendars, ringtones, heath apps, sports stuff, utilities, and more that are 99 cents or $1.99. Some are more expensive, of course.
As I pointed out here before (see, “And so the Comcast-NBC Merger Hysteria Begins: Help Me Document It!“), every time a media merger is proposed we hear all sorts of silly Chicken Little predictions of impending doom as well as preposterous conspiracy theories about supposed nefarious schemes to take over the media universe and control our minds. For good measure, there’s also plenty of talk of “the death of deliberative democracy,” or efforts to weed out one sort of perspective or another.
As history has shown, it’s all complete bunk. But that doesn’t stop critics from concocting asinine theories about media providers seeking to “silence critics.” Here’s two bits of Chicken Little-ism that I missed in my previous essay documenting this silliness. First, over at Huffington Post, Marvin Ammori tells us that America is about to become Italy or Argentina because of the deal:
Putting so much power in the hands of one company–and, specifically, its executives–is dangerous for a democracy. There is a reason why autocratic regimes control the media–media shape public opinion and define what is “possible” in politics. We have seen the problem of private media consolidation in many countries. In Italy, Silvio Berlusconi used his massive media empire to win elections and is now Prime Minister (Italy’s longest serving ever). In Argentina, the government had to pass a media consolidation law because of the power of one media company that happens to be far smaller than a combined Comcast-NBCU.
And then we have Wade Norris writing about the deal over at the Daily Kos, saying: “If you don’t want to see the progressive voices on MSNBC silenced, then join the ‘no merger’ petition.” Ah yes, another automated “stuff-the-online-complaint-ballot-box” petition. I love those gimmicks. But ignore fake complaints for a moment and focus on the accusations at hand here. The Ammori-Norris theory is: If Comcast and NBCU are allowed to marry (a) progressive voices will be driven off their platforms and (b) Silvio Berlusconi will take over America democracy will somehow suffer. Is there really any truth to this? Continue reading →
Three months ago, when the DC Circuit struck down the FCC’s “Cable Cap”—which prevented any one cable company from serving more than 30% of US households out of fear that he larger cable companies would use their “gatekeeper” power to restrict programming—the New York Times bemoaned the decision:
The problem with the cap is not that it is too onerous, but that it is not demanding enough.
Even with the cap — and satellite television — there is a disturbing lack of price competition. The cable companies have resisted letting customers choose, a la carte, the channels they actually watch….
[The FCC] needs to ensure that customers have an array of choices among cable providers, and that there is real competition on price and program offerings.
Perhaps the Times‘ editors should have consulted with the Lead Technology Writer of their excellent BITS blog. Nick Bilton might have told him the truth: “Cable Freedom Is a Click Away.” That’s the title of his excellent survey of devices and services (Hulu, Boxee, iTunes, Joost, YouTube, etc.) that allow users to get cable television programming without a cable subscription.
Nick explains that consumers can “cut the video cord” and still find much, if not all, their favorite cable programming—as well as the vast offerings of online video—without a hefty monthly subscription. (Adam recently described how Clicker.com is essentially TV guide for the increasing cornucopia of Internet video.) This makes the 1992 Cable Act’s requirement that the FCC impose a cable cap nothing more than the vestige of a bygone era of platform scarcity, predating not just the Internet, but also competing subscription services offered by satellite and telcos over fiber. That’s precisely what we argued in PFF’s amicus brief to the DC Circuit a year ago, and largely why the court ultimately struck down the cap.
Bilton notes that “this isn’t as easy as just plugging a computer into a monitor, sitting back and watching a movie. There’s definitely a slight learning curve.” But, as he describes, cutting the cord isn’t rocket science. If getting used to using a wireless mouse is the thing that most keeps consumers “enslaved” to the cable “gatekeepers” the FCC frets so much about, what’s the big deal? Does government really need to set aside the property and free speech rights of cable operators to run their own networks just because some people may not be as quick to dump cable as Bilton? Is the lag time between early adopters and mainstream really such a problem that we would risk maintaining outdated systems of architectural censorship (Chris Yoo’s brilliant term) that give government control over speech in countless subtle and indirect ways? Continue reading →
PFF has just released the transcript of an excellent panel discussion I moderated last week entitled, “Let’s Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum.” As I’ve mentioned here before, one of the hottest issues in DC right now is the question of broadcast TV spectrum reallocation. Blair Levin, who serves as the Executive Director of the Omnibus Broadband Initiative at the Federal Communications Commission, recently raised the possibility of reallocating a portion of broadcast television spectrum for alternative purposes, namely, mobile broadband. Such a “cash-for-spectrum” swap would give mobile broadband providers to spectrum they need to roll out next generation wireless broadband networks while making sure broadcaster receive compensation for any spectrum they hand over. The FCC just recently released a public notice on “Data Sought on Users of Spectrum,” (NBP Public Notice # 26) that looks into the matter. “This inquiry,” the agency says,” takes into account the value that the United States puts on free, over-the-air television, while also exploring market-based mechanisms for television broadcasters to contribute to the broadband effort any spectrum in excess of that which they need to meet their public interest obligations and remain financially viable.” Meanwhile, the House Energy and Commerce Communications Subcommittee is set to hold a hearing on the issue next Tuesday.
PFF’s panel discussion on this issue featured an all-star cast of characters, including opening remarks by Blair Levin, and a terrific discussion ensued. [You can hear the full audio from the event here.] Down below I have highlighted some of the major points each speaker made during the discussion and also embedded the complete transcript in a Scribd reader. Also, just a reminder that my PFF colleague Barbara Esbin and I authored a short paper on this issue recently: “An Offer They Can’t Refuse: Spectrum Reallocation That Can Benefit Consumers, Broadcasters & the Mobile Broadband Sector.”
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.