The Bad Business of Media Mergers
When Steve Case of America Online announced his purchase this week of Time Warner, he listed the new company's activities in the following order: First there was entertainment. Then there was e-commerce. Down the list a ways came journalism.
The news coverage probing the potential impact of this deal on journalism has focused generally on whether reporters and editors will face new conflicts of interest. Won't an otherwise independent reporter for Fortune, Time, Money or CNN now have interests that will interfere with that independence when he or reports on AOL?
Unfortunately, this is the wrong question and largely misses the bigger implications of the merger and the new era of superconglomeration it invites.
The problem with the conflict of interest construction, in part, is that it is too squishy. How can we really tell, when an excellent Fortune reporter appears on CNN praising the deal, whether he is feeling any constraint on what he can say? Trying to pinpoint the moment of self-censorship, or internal conflict, is like trying to photograph someone's thought processes.
Critics are left grasping at a handful of examples: a killed story on Disney theme parks here, a cover on the movie "Twister" there.
What we can identify, however, is that these megamergers have turned out to be a bad business strategy for journalism. Most evidence now suggests that synergy doesn't work for news organizations. Paradoxically, the merger strategy intended to save the old media may be what actually destroys it.
News organizations are in the business of selling subtle brands. Newsday, for example, is distinctly different from The New York Daily News, The New York Times or USA Today. Consumers know the difference, even if they cannot always articulate it. That's why a reader might prefer Time over U.S. News & World Report, or one columnist over another. It's not because one represents good journalism and another bad. It is a more delicate mix of characteristics like voice, tone and taste.
The history of recent mergers suggests that when media companies synergize their brands, they do not add to them. They dilute them.
Consider Time Warner's own experience. CNN represents quick and copious, if sometimes sloppy, coverage -- the world's video news service. Time has epitomized an Olympian, establishment voice synthesizing events after the fact into a kind of world view.
When they collaborated to make prime-time magazines on CNN, the results were not good. The maiden voyage, a misguided expose into purported use of nerve gas in Vietnam, proved so uneasy that Time wanted little to do with it. Have the subsequent prime-time magazine programs represented the speed of CNN or the deliberation of Time? They are in some ways contradictory values. The results so far have been indistinct and the ratings unfulfilling.
As a reader, one might like the work of Tom Wolfe and Philip Roth. That doesn't mean a book they wrote together would be twice as good.
A Time Warner executive admitted to a group at the Columbia Journalism School this summer that "the lesson of synergy at Time, Warner, CNN is that it doesn't work."
At ABC, the ownership by Disney has also revealed a blurring of brand. Not long ago, Michael Eisner told National Public Radio: "I would prefer ABC not cover Disney. I think it's inappropriate for Disney to be covered by Disney."
Mr. Eisner was revealing something deeper than conflict of interest. ABC's identity has been altered, and in some ways joined with Disney's. It is Disney covering Disney, at least in the mind of the C.E.O.
In some ways the idea of conflict of interest may itself become antiquated. The interdependencies inside AOL Time Warner will be so myriad that any claim by its journalists to independence -- and therefore worries about conflicts -- may no longer be realistic. The problem is in covering not just AOL, but all of the Web, e-commerce, entertainment, cable, telecommunications and on and on.
The theory of a free press that evolved out of the Enlightenment was that there would be an independent voice that could comment on and monitor the influence of powerful institutions in society.
Can we rely on a small cadre of behemoth corporations to monitor themselves?
AOL may be spending hundreds of billions of dollars to acquire brands that in the process of combination it may destroy. And if it proves to be the model, barely noticed in the economic reorganization will be the end of America's independent press.