AOL, Time Warner buyout blasted

By Tim Wheeler

Defenders of freedom of expression warned this week that America Online's (AOL) plan to buy Time Warner for $165 billion, the costliest merger in history, is a threat to democracy and should be blocked under the Sherman Antitrust Law. The merger, if approved, would create a corporation with a market value of $342 billion. But it will require the approval of stockholders and federal regulatory agencies.

Robert W. McChesney, author of Rich Media, Poor Democracy (University of Illinois Press), told the World, "There is no way we can have a sane, rational, humane society and leave the media in the hands of Time Warner and Rupert Murdoch. This is a central issue for progressive people to organize around."

The fight for a democratic mass media, he said, must be part of a larger struggle for basic demands like election reform, full employment, equal funding of public education, and a national health care system.

Jim Naureckas, editor of "Extra," magazine of Fairness and Accuracy in Reporting (FAIR) told the World the AOL-Time Warner merger would give the new corporation "a huge amount of power to determine what the people are going to be seeing and hearing." He cited a statement by Time Warner chief Gerald Levin, that the media in the 21st century "is going to be more important than the government" and should be free of any government regulations.

"Given that they envision themselves with that much power, doesn't that suggest that there should be some government controls and some competition? We want this merger stopped. We are going to be mobilizing people to put pressure on the regulatory agencies to block it," Naureckas said.

"Those who create information and those who transmit it should be kept separate. That's a long-standing antitrust principle."

Naureckas recalled the antitrust ruling that forced the Hollywood movie studios to divest their ownership of movie theaters across the nation. "It is a principle that has been allowed to fall by the wayside. The antitrust division of the Justice Department has been asleep at the wheel. They are waiting until everything is a fait accompli."

The AOL Time Warner conglomeration is just the latest in a frenzy of media mergers that includes Disney's buyout of ABC News, Time Warner's purchase of CNN and Viacom buying CBS News. Billions of dollars have traded hands in this merger-mania and the number of major media corporations has shrunk from about 50 in 1983 to fewer than ten today.

America Online is the dominant Internet provider in the U.S. with 22 million subscribers to AOL and CompuServe. Its ICQ and AIM messaging services are used by 100 million people. AOL purchased Netscape, the original Internet browser in 1998. Time Warner is the second largest cable TV provider with 13 million customers.

The Time Warner empire also encompasses 33 magazines with a combined circulation of 120 million people. It owns Warner Brothers Studios and New Line Cinema which grossed $1.4 billion last year. It also owns the WB television network, TBS, HBO and TNT. Time Warner sold 119 million records last year.

The merger scramble is expected to continue. AT&T, owner of the biggest network of long distance and cellular phone services is also the largest cable TV provider. It is expected to buy a share of Time Warner's MediaOne network, another step toward an absolute media monopoly.

Naureckas warned that these media giants, already holding immense power over mass thought patterns, will gain dominance over the newest channel of mass communications, the Internet.

"They are structuring people's access to the Internet to steer people away from individual and small group web sites that don't have much money. Many people who log onto AOL, never leave the AOL area. They look at the proprietary offerings of AOL. Those who control the signposts have a huge amount of power. It is a step toward turning information into a commodity," he said.

"You'll get information about cars, for example, from someone who has a commercial relationship with General Motors. The merger between news and shopping is very dangerous to democratic political discourse."

McChesney charged that the drive by AOL, Time Warner, Microsoft, and other giants to gain a stranglehold will be the death of the Internet. "The argument had been that the Internet would provide the technological basis for all sorts of newcomers to enter the media world." The Internet, he said, is a "testament to socialism. It is the direct result of public investment that no corporation would have considered rational."

In the 1970s, he said, the Pentagon asked AT&T to take over the Internet. "They refused. They said there was no way they could make money from it." In those early decades, the Internet was virtually free of commercialism and any attempt to buy or sell on the system was banned.

"Then, without a shred of public debate, the decision was made to commercialize it," said McChesney. "It was an extraordinarily corrupt decision since the public sector did all the work, took all the risks and Wall Street is now reaping all the profits." In effect, he said, the Internet is being "privatized."

In his well-documented book, McChesney argues that antitrust laws should be enforced to block new megamergers and break up the existing media conglomerates.

"The political power implied in the consolidation of media into a handful of corporate behemoths rivals that of the great trusts of the Gilded Age," he writes.

Three television networks, ABC, CBS and Fox, announced last Dec. 20 that they are merging their news services into a single domestic news "cooperative" called Network News Service to produce the same sanitized pro-corporate, pro-Pentagon line. NBC was excluded and NBC spokesperson Alex Constantinople said, "We think it's curious we were not included in these discussions."