The New Media Company - Jan. 10, 2000

The New Media company

January 10, 2000: 3:53 p.m. ET

Analysts and market experts weigh in on the Time Warner/AOL marriage

NEW YORK (CNNfn) - The announcement of AOL and Time Warner’s stunning $180 billion merger sent shock tremors throughout the market Monday.
    The move according to experts and analysts boosted AOL’s image as a company poised to take advantage of technology opportunities. And it might push other media companies to follow Time Warner’s lead in creating a synergy with Internet firms.
    The following is a compilation of what experts had to say about the proposed deal.

".. This really underscores the strength of the Internet,” said Chris Dixon media analyst, Paine Webber, "The Internet is here and it’s no longer just about techs. It’s about broadband, it’s about streaming video, it’s about streaming music and it’s about coming up with all kinds of ways to use your computer in a very TV-like experience.”

Click here for full coverage of the deal.

    "I think from Time Warner’s point of view ... it’s a question of extending brands, whether it’s going to be CNN, CNNfn, whether it’s going to be the music business or entertainment,” Dixon added.
    "And from AOL`s point of view, it does two
    things -- it allows them to have an ownership interest in those brands, so therefore they are not going to be subject to the kind of licensing vagaries that you would have if you didn’t actually own the folks who either made music or made film or made TV. And for those of us who are consumers, it really accelerates the experience we’ll have as we move into the next generation of computers.”
    To hear an excerpt of Dixon’s comments click on [WAVE 288KB] or [AIF 288KB]

    For David Londoner, media analyst at Schroder & Company, the deal is one that will have other companies scrambling to catch up.
    "And one of the reasons that you see all of the other stocks lifting today is people are speculating, what does Yahoo! (YHOO) do, what does Lycos (LCOS) do, et cetera.”
    "What is interesting about this deal is that it’s a merger of profitable companies. This is not an old media company merging with some wildly speculative business,” said Londoner. "These are really solid companies, they both make money, and they both have you know very, very impressive growth.”

    Dan MacKeigan, Internet analyst with Friedman, Billings and Ramsey also speculated that Yahoo! along with other firms like AT&T (T) and Disney will try to forge similar deals.
    "AOL has always been the most aggressive and the leader in business development and striking relationships,” MacKeigan said. "Time Warner also is known for that in the off-line world. But (for) Yahoo! and other properties like Excite, @Home (ATHM)... there are other properties that are still available.
    MacKeigan said, "Disney (DIS) still may strike some relationships with people. CBS (CBS) has been very aggressive in the Internet space. I’d expect more of these traditional media companies partnering with non-traditional Internet companies.. because it is the new millennium. We’ll have to
    push forward.”
    For more on MacKeigan’s comments click on [WAVE 262 KB] or [AIF 262 KB]

    Time Warner (TWX) is very dominant in a variety of media platforms, America Online (AOL) is the dominant player in the Internet distribution platform of media,” said Scott Ehrens, Internet analyst, Bear Stearns. "Together, it really creates an unprecedented powerhouse.”
    "Investors have been a little bit hard on AOL over the last year because they haven’t had a clear-cut broadband strategy, particularly on the cable platform, " Ehrens said. "AtHome has made tremendous strides developing subscribers on that platform, but Time Warner does have a cable strategy. So, now, AOL will presumably have access to that.”
    The move, said Ehrens will make other Internet companies look at their media strategy.
    "The big question will probably hover around Yahoo! which doesn’t have any significant relationship with a major media company.”

I think that what we’re looking for is the enhancement of the Internet experience it is going to be extraordinary as we go forward, " said Michael Kupinsky, media analyst at A.G. Edwards. "As the Internet migrates to a cable broadband or DSL platform, I think the drive here is that the Internet companies are going have to move into the entertainment aspect to drive customers to the Internet and also to retain existing customers. So it’s a deal that is of strategic importance to AOL.”