A Brief History of Media Merger Hysteria: From AOL-Time Warner to Comcast-NBC
Progress & Freedom Foundation, Progress on Point, Vol. 16, No. 25, December 2009
12 Pages Posted: 3 Dec 2009
Date Written: December 2, 2009
The effects of mergers on the media marketplace have historically failed to live up to dire predictions. Mergers are often a response to technological upheaval and turbulence in the media industry and firms should be allowed to experiment with such alternative business models with the intent on keeping the companies financially viable.
Recent examples of prominent media mergers that failed to create the predicted consumer catastrophe that critics predicted include AOL/Time Warner, News Corp/Direct TV, Sirius-XM, and Rupert Murdoch's purchase of The Wall Street Journal. Instead of being detrimental to the media landscape as some regulators and interest groups forecasted, the deals illustrate why such panic is unwarranted, and why a deal between Comcast and NBC Universal is unlikely to lead to the sort of problems that the pessimists suggest.
Also disputable are predictions that a deal between Comcast and NBC Universal will increase vertical integration in the market, as the cable industry control of the video marketplace has actually plummeted to under 15 percent and independent viewing options have exploded. It is difficult to imagine that Comcast would buck these trends and begin restricting independent options on its systems or withhold its content from others. Video distributors don't make money by restricting choice.
Policymakers would be wise to avoid micro-managing mergers and instead let things run their course. Sometimes collaboration makes a great deal of sense, especially when the significant costs of providing media services become impossible to provide absent partnership. Healthy media companies certainly must be part of the answer and new ownership arrangements might be part of the solution.
Keywords: media, policy, merger, mergers, AOL, Time Warner, Comcast, NBC, Universal, Internet, hysteria, Norman Solomon, Huxley, Big Brother, diversity, Chicken Little, Wall Street Journal, Rupert Murdoch, digital, death star, Star Wars, Hitler, Marxist, evil, Karl Frisch, Ted Turner, Howard Dean, Robert McC
JEL Classification: D4, D40, D41, D42, D43, L1, L11, L12, L22, L4, L40, L43, L51, L82, L86, L96, L98
Suggested Citation: Suggested Citation