Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • My Term Papers • Get Free Essays • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Economics Time Warner and AOL merger Time Warner and AOL merger Time Warner Corporation has numerous subsidiaries which are moving media materials across media boundaries. They are doing this in numerous ways, based on synergies and joint ventures. For example some of these include gaining more access to cable lines by a joint venture with US West, and merging with AOL. They are also using a tactic called co-development as properties are knitted together by sister companies both interested in profiting off of them. This is a type of synergy because it occurs within one media conglomerate itself, and it encourages cross-media activity between the two sister companies. Time Warner can place some of its music on its television shows or movies, or write about its musicians in their magazines. The theory is that these different media would help promote one another and sell more records, more advertising,more tickets, and then certainly more revenue. Terry Hershey, president of Time Warner Interactive's Entertainment division says "We have now built into our process the protocol that when we look at a project we automatically say, what other applications are there?" Time Warner Interactive is a subsidiary of the media conglomerate Time Warner Inc. and is currently making use of this idea of co-development. For example, in the fall of 1994 they launched a CD-ROM version of the classic "Peter and the Wolf" at the same time that Warner Books published a print edition and Time Warner Audiobooks debuted its cassette edition as well as a CD version. "Each 'Peter' product will talk about the other products," says Hershey. "The audiocasette will have a teaser for the other products, for instance and the book jacket will mention the CD-ROM." There were also ideas about creating a television special on Peter and the Wolf which would raise awareness about everything on the market. There are numerous cases of these sister companies working together. In 1995 Warner Books and Time Warner Interactive launched their own version of a new story which was written specifically to be both a novel and a CD-ROM. It was to be called "Mirage" and was a story about two sisters. The music that accompanied it ranged from opera to classical to alternative rock. Co-author Matthew Costello stressed using multiple types of media to make the story have more of an emotional impact on the audience. This is why these products are being developed together. Hershey says "Rather than cannibalizing on sales, this will spur them. Consumers will be more likely to buy the other product if they have bought on-not less likely." These types of synergies, which are basically collaborations within the media conglomerate encourage sales by adding more excitement and the cross-promotion brings all of the products more visibility than they would be able to receive on their own. This type of synergy is also happening in another section of the Time Warner conglomerate. A Warner Books imprint, Mysterious Press is working with a sister company, Time Warner Electronic Publishing. "TWEP and online game publisher Simutronics have joined forces to create an online, text-based, interactive mystery game that will draw on resources of Mysterious Press' editors and its stable of authors." These types of synergies can be very beneficial because they help to bring some media material, in this case these stories across different types of medias, and in this way they are cross-advertising for each other. Time Warner is also taking part in joint ventures which bring it more opportunities to advertise and sell its products. For example, in 1993 Time Warner and US West worked together to improve U.S. cable systems to an interactive fiber-optic data highway that could lead to such direct services to the home as music on demand and video on demand. This deal was based on U.S. West investing $2.5 billion in Time Warner Inc. which gave them a big stake (25.5%)in several Time Warner operating units including Warner Home Video, Home Box Office, and Warner Bros. Pictures. This was the result of a long search by Time Warner to find some company to help them pay off their debt. The venture helped the fiber-optic "full service network" which Time Warner Cable was building for 4,000 homes near Orlando. This construction was to be a model for cable upgrades in the U.S. "Using this 'electronic superhighway' consumers will have access to vast libraries of data and entertainment programming." All of this would make the system more supportive of interactive services. The global media system is now dominated by a group of nine giant firms. The five largest are Time Warner (1997 sales: $24 billion), Disney ($22 billion), Bertelsmann ($15 billion), Viacom ($13 billion), and Rupert Murdoch's News Corporation ($11 billion). They all operate under the same rule that you must get bigger so that you can dominate markets and you can dominate your competition so that they can't buy you out. Firms like Disney and Time Warner have almost tripled in size this decade. It is also interesting that Time Warner recently combined itself with AOL, one of the largest internet service providers. This means that there are 22 million on the internet through AOL and the offerings of Time Warner will be most apparent to them when they are on the internet at that time. This deal is similar to the deal with US West, as Time Warner will be providing them with cable access, and they will get increased publicity from AOL. The case of the joint venture between Time Warner and US West provides a good example of how working together in cross media activities can be beneficial to these media conglomerates. Because Telephone companies already use much of the similar technologies, it is easier for them to set up some system of interactive two-way services which could eventually allow them to transfer other types of media, such as music. It is not always beneficial, however to the customers because it means that they have a virtual billboard flashing at them when they are on the internet all the time. The huge boom in the use of the internet as a tool for joining corporate forces poses many future problems to contend with. Time Warner has had a huge influence on the way the whole world views internet companies. The AOL-Time Warner merger provides credible evidence of the lines becoming even more blurred. AOL's CEO Steve Case argues that "this merger launches the next Internet revolution". The importance of Monday's deal was not its financial size, but instead it was the fact that for the first time an Internet company bought an established traditional media company rather than the other way around. It was at that point that the Internet stopped being seen as a medium just for the people who are in the field and instead emerged as the dominant force that is responsible for shaping our entertainment, along with our information and our communications. It is now at the foreground for media corporations to take hold of it, and sap all of the resources that are available. There are also many social costs from the merger that are substantial. The synergies indicate that there is an increase in market power. Now, AOL will be able to give special position to Time-Warner content, at the expense of content that might be better but doesn't have the market power of a "synergistic" merger behind it. The consumer will be faced with either believing the content of the ads they see, about the quality of a product, or having to question not only the ads intentions but also those of whoever is hosting the ad. Competition will be weakened not only by the preferential treatment given own-content within this vertically integrated giant, which will make it tougher for outsiders to reach and/or sell to target audiences, it will decline because of the rush to consolidate into comparable giants by AOL's and Time-Warner's rivals. The example of Peter and the Wolf shows how these synergies within a conglomeration can help that company to advertise one product through the marketing of a different product. Time Warner is making use of both of these techniques to improve their profits and get their products out in different media forms and through different media boundaries. Bibliography: Works cited: Gillen, Marilyn A. "Co-development projects extend synergy options." Billboard; Oct 1 1994, v106, n40, p60 (1) Jeffrey, Don "U S West gains entertainment link; time Warner backs deal, upgrades cable." Billboard; May 29 1993, v105, n22, p6 (2) Solomon, Norman, The Big Media Six, http://www.zmag.org/ZMag/articles/solomonjune2000.htm Bensimon, Jack J. StockHouse News Desk. “AOL-Time Warner Merger Accelerates Next Internet Revolution” January 11, 2000 http://www.stockhouse.com/shfn/jan00/011100com_aoltime.asp O’Brien, Chris. “A marriage of convergence” Mercury News, January 10, 2000 http://www0.mercurycenter.com/svtech/news/indepth/docs/aol011100.htm Herman, Edward S. “The AOL-Time Warner Merger: Billboarding the Information Superhighway” http://www.peacecenter.com/articles/herman_aolmerger_011600.html Word Count: 1368
Copyright © 2005 College Term Papers, INC All Rights Reserved.