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Wednesday, 11 October, 2000, 10:00 GMT 11:00 UK
Q&A: What merger means to consumers
BBC News Online looks at some of the key questions raised by the mega-merger between AOL and Time Warner.

What does it mean to me?

The merger is seen as providing a model for delivering news and entertainment to internet users.

The immediate impact will be felt by AOL subscribers. They are likely to be offered a lot more material through the internet from the stable of Time Warner.

But this is only the beginning. There has been much talk about the coming together of television and the internet. In the long-term, you could sit at home and watch your favourite television programme, get more information on the plot or characters with a simple click, or chat with other viewers about what is happening in your favourite soap opera.

And how might I access all this in years to come?

The main stumbling block for the internet at the moment is speed and cost. We have all waited at home for a page to download while your connection racks up your phone bill.

Various technologies are currently being rolled out to make it faster to access the internet, such as broadband and ADSL. A company like Time Warner could offer fast web access through its cable network.

AOL says this will speed development of the interactive medium. How?

One of the main differences between television and the internet is that the former is a passive experience while the other puts you in control.

AOL has been trying to build up internet communities - groups of people across the world brought together by common interests and the internet. Following the merger with Time Warner, it will have the financial clout to develop the interactive services it already offers.

Why do such big players want to merge?

The merger marks the coming together of traditional and new media to exploit the opportunities offered by each. It makes overwhelming sense for both AOL and Time Warner.

Together they have the cocktail of ingredients to succeed in the internet business - a strong customer base, appealing content, and ways to distribute it.

AOL seeks to portray itself as a gateway to the internet, with its homepage as the starting point for exploring the web. But it lacks its own content to attract more users to the service.

As one of the world's leading media companies, Time Warner has a wealth of material, such as news, films and cartoons, that it could offer through the web. But it does not have the internet presence or know-how to do this effectively.

It has pumped millions into internet ventures but has failed so far to make an impact in cyberspace.

What can both companies offer each other?

Time Warner brings to the deal a whole raft of media interests.

It owns several cable television channels such as CNN, TNT, HBO and the Cartoon Network. It also publishes the magazine Time and People. And it has music and film interests, behind blockbusters such Blade, The Cell and The Matrix.

As the world's largest internet service, AOL brings more than 30m subscribers to the deal, as well as a well-established brand on the web. But more importantly, it brings tried and tested strategies of using the internet to provide information and entertainment.

Time Warner: Media mammoth

Where does this merger leave the competition?

There has been a tendency for the leading players to seek strategic alliances. The internet is no longer something broadcasters or newspaper publishers can ignore. They are realising this and are looking for ways to break into the internet.

Many internet services have that presence on the web, as well as internet skills and experience. What they lack is the money and content to build on what they have achieved.

The recent shake-out of the internet market has confirmed worries that web start-ups often lack the financial stamina to grab sufficient audience share for a sustainable business.

Some players have already joined forces. Software giant Microsoft and the US television network NBC are behind MSNBC.

After the merger between Time Warner and AOL, others will be looking around to stake their claim in cyberspace.

The marriage of AOL and Time Warner is likely to lead to considerable consolidation with more mergers, acquisitions or partnerships as traditional media companies scramble to jump on the internet bandwagon.

However, despite all the excitement, no other firms have made a move yet. They are circling each other, snapping up smaller rivals and start-ups, but the next big deal is still to come.

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