One day after AOL's stock acquisition of Time Warner,
USA TODAY's David Lieberman writes that the new company, AOL
Time Warner, expects to "find limitless ways to develop new
Web content and to cross-promote their products." Company
execs said yesterday that Time Warner will give AOL
"customers discounts on its magazines and premium cable
channels" (USA TODAY, 1/11). In N.Y., Phyllis Furman writes
that the deal allows Time Warner to "ramp up its E-commerce
business and sell more advertising by packaging its
magazines, TV and cable networks" with AOL's Internet
service. Merrill Lynch media analyst Jessica Reif: "This
gives Time Warner a new media strategy. It would have taken
them years to do it on their own" (N.Y. DAILY NEWS, 1/11).
On "CBS Evening News," Jerry Bowen called the merger "a
marriage of content and distribution." Paine Webber analyst
Christopher Dixon: "It's all about high-speed access to
information, to entertainment, and to purchasing all kinds
of merchandise" ("CBS Evening News," CBS, 1/10).
WHAT IT GIVES BOTH GROUPS: The WALL STREET JOURNAL's
Weber, Peers & Wingfield report that for AOL, "first and
foremost," the deal allows access to Time Warner's
"extensive cable holdings" which gives AOL "a badly needed
network of broadband connections to the home." In addition,
Time Warner's entertainment properties will "help bolster"
AOL TV, which will create enhanced TV services running off
set-top boxes (WALL STREET JOURNAL, 1/11). Through Time
Warner's cable systems, AOL will be able to reach about 20%
of U.S. cable subscribers to deliver its high speed Internet
access (WASHINGTON POST, 1/11). CNBC's Scott Cohn reported
how the deal gives AOL "content from Money Magazine to the
Cartoon Network." AOL users will get "electronic versions"
of Time Warner's magazines and AOL Time Warner says "taking
their brands into a digital environment will bring them
closer to consumers," including sports ("Business Center,"
CNBC, 1/10). In San Jose, Deborah Kong writes that the deal
means more content from the likes of SI "will be packaged in
a more Web-friendly way" (SAN JOSE MERCURY NEWS, 1/11). The
WALL STREET JOURNAL's Matthew Rose writes that the deal
"could sharply accelerate the use of the Internet as a
subscription builder" for Time Warner's titles, and magazine
execs "hope to ape AOL's billing strategy" (WALL STREET
JOURNAL, 1/11). In N.Y., Saul Hansell reports that with the
deal, Time Warner is "acknowledging" that its own online
"operations have been lackluster," as its original
Pathfinder service was "never able to turn the company's
substantial brands" like SI "into a major force" (N.Y.
TIMES, 1/11). The FINANCIAL TIMES' "Lex" column states that
by allying with AOL, Time Warner "turns the net from a
threat to an additional distribution platform, and leapfrogs
peers such as CBS and Walt Disney, which have had more
developed online strategies" (FINANCIAL TIMES, 1/11). The
INDUSTRY STANDARD's James Ledbetter wrote the deal "reflects
an urgency within Time Warner to step up and solidify its
Net presence" (INDUSTRY STANDARD, 1/10).
THE NEW POWER PLAYER: USA TODAY's Michael Hiestand
writes in a Sports cover story that with yesterday's deal,
AOL "became the first Internet creation to become a major
player in the sports world as it" inherits the Braves,
Thrashers and Hawks, as well as Turner Field, Philips Arena,
SI, CNN/SI, CNNSI.com and the Goodwill Games, among various
sports properties. But Turner Sports Teams President Stan
Kasten predicts business as usual for his entities: "As far
as I know, there's no impact." Hiestand writes that "live
sports events online" is part of AOL Time Warner's future,
but that area remains "uncharted territory." Emory Univ.
Marketing Professor Jagdish Sheth said that 10% of consumer
market PCs have broadband capability to receive live sports
action, "but that could reach 50% in five years." Hiestand
adds that that means sports leagues' online revenues should
"zoom above current levels." But Pilson Communications
President Neal Pilson doesn't see a bidding war for TV
sports events between Internet and TV outlets. Pilson:
"Bids will come from one company, not two" (USA TODAY,
1/11). Kasten, alluding to Time Warner's acquisition of
Turner Broadcasting in '96: "The last merger we had didn't
affect anything at all" (AP, 1/10). BRIDGE NEWS' Jennifer
Allen wrote that the deal "will speed professional sports
leagues to evaluate existing broadcast rights deals,
attempting to place a value on Internet-related revenue."
AOL's presence will likely "boost traffic to Time Warner
sites, at the expense of other sports sites." In addition,
sports teams and players on AOL Time Warner teams could
"enjoy a marketing edge because of the Internet exposure AOL
would offer and the cross-promotional opportunities
presented" by both groups (BRIDGE NEWS, 1/10).
IMPACT ON SPORTSLINE: The HOLLYWOOD REPORTER's Stephen
Battaglio notes that AOL is in the second year of a three-
year content deal with SportsLine. When that deal expires,
AOL could replace SportsLine with Time Warner's CNNSI.com.
But AOL President & CEO Bob Pittman said, "Exclusivity is
not an issue. We will continue with our partnership with
CBS." One CBS "insider" said, "There's no reason to believe
we won't carry on our relationship with AOL. No one is
isolationist in this day and age. You can't be" (HOLLYWOOD
REPORTER, 1/11). TheStreet.com's George Mannes noted that
SportsLine shares were down 10.6% yesterday, closing at 44
3/4, on speculation that it would be "edged out" by
CNNSI.com when the AOL deal expires (TheStreet.com, 1/10).
