AOL EATS TIME WARNER- media update, by Camille Taiara

When America Online, the world's largest Internet service provider, announced on January 10 its purchase of Time Warner, the world's largest media and entertainment company, Time Warner President Richard Parsons described it as "a pivotal moment in the unfolding of the Internet age."



Media activists and those concerned about preserving the Internet as an accessible and diverse media source think so too, but they're far less happy about it than Parsons is.

With holdings such as Time, People, Fortune, and Sports Illustrated magazines, Warner Brothers, Warner Music, and the WB Network, to name but a few, Time Warner was an attractive cohort for AOL. But the crown jewel that drove AOL to dish out an unprecedented $166 billion for the media giant was Time Warner's cable system--the country's second largest. Upgraded cable lines allow high-speed Internet connections that can deliver data-intensive digital media such as audio and video.

The convergence of AOL's Internet service with Time Warner's news and entertainment productions and cable lines will enable the new AOL to create what company chairman Steve Case dubbed an "integrated consumer space," with the company simultaneously producing content and providing high-speed Internet access, news, entertainment, telephone service, and wireless web connections directly to hundreds of millions of users.

"We don't want AOL to be a place people go through to get someplace else," explained Case at the New York press conference announcing the deal. And in the end, many may not have much of a choice.

AOL's growth into a broadband media conglomerate puts pressure on other large Internet, media, and telecommunications companies to follow suit or go out of business.

"The notion of the Internet as an alternative media source is fading quickly," laments Robert McChesney, professor of communications at the University of Illinois, while these megacorporations' continued diversification increases their ability to "commercially carpet-bomb us at every turn."

Beyond the increased commercialization of news and culture lie heightened concerns about infringements on privacy. To help business clients market products more effectively, Internet service providers like AOL already collect information on the websites their users visit, what they buy, and what chat rooms they log on to.

The practice of keeping such records of our personal histories--of our every move, interest, relationship, and political inclination--has already set an Orwellian precedent. But the danger is compounded when you consider that, with local cable monopolies in many areas, the merged AOL/Time Warner could turn out to be the only way for the public to receive broadband access in many parts of the country.

Time Warner already controls 20 percent of the U.S. cable market. And with AT&T's pending buy-out of MediaOne--expected to be completed this Spring--AT&T will own 25 percent of Time Warner Entertainment. "If officially allied, AT&T and AOL/Time Warner would control about half of the nation's cable households," warns Jeffrey Chester, executive director of the Washington, D.C.-based Center for Media Education and one of Media Alliance's earliest members.

Unlike their counterparts in the telephone industry, explains Chester, cable network owners control access to their lines and what they transmit--allowing them to charge rival websites and ISPs to get on the network, and giving them free reign to censor any competition or alternate views.

Cable's closed networks also threaten open access to phone wires, as the telephone industry has already been asking the Feds for "regulatory relief" based on the preferential terms granted to cable companies. "If they're not open, why should we be open?" is the phone companies' argument, says Chester.

Nonetheless, the Clinton Justice Department seems to be approaching its pending antitrust review of the merger as a mere rubber-stamping process, and analysts expect the deal to be completed by the end of the year.

The CME and others question this purported inevitability. In a statement released the day the AOL/Time Warner deal was announced, Chester's organization joined forces with the Consumers Union, the Consumer Federation of America, and the Media Access Project in calling on the FCC to implement regulations mandating open, nondiscriminatory access to broadband cable feeds.

"The principal safeguard is open access," argues Chester. "Any attempt to deal with media concentration is a long-term effort. At the very least what we need is a policy safeguard that permits diversity of perspectives."

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