Where the Merger Could Impact Microsoft

AOL Time Warner (AOLTW) is now the largest and most powerful media company in the world. Although both it and Microsoft face challenges integrating their disparate offerings, AOLTW has a significant head start in several areas, notably content. This not only gives it an advantage in creating more engaging online services but also a reasonable likelihood of achieving the oft-promised “convergence” of Internet-style on-demand delivery and TV-like multimedia entertainment, over broadband networks, within a single unified product or service.

Advantage AOLTW

Areas in which AOLTW has a definite advantage include the following:

Multimedia content. AOLTW owns Warner Music, one of the “Big Five” record labels that, together, account for 80% of all music sold worldwide; Warner/Chappell Publishing, which has copyrights to more than 1 million songs; Warner Bros. Studios, with more than 7,000 movies, 30,000 TV shows, and 13,000 animated features; the WB broadcast TV network; and four cable TV channels included among the top 15 in Nielsen’s overall year 2000 prime-time cable ratings (#2 TBS SuperStation, #3 Cartoon Network, #6 Turner Network Television, and #15 CNN).