Late summer 1995, and the spate of media mergers
Twenty years ago this week, Disney Company revealed it was buying the parent corporation of ABC for $19 billion in what then was the second most-lucrative corporate merger ever in America. The deal was announced to much surprise on July 31, 1995, and was followed a day later by Westinghouse Electric saying it would pay $5.4 billion to acquire CBS, once regarded a crown jewel of American broadcasting.
Seven weeks after that, the third of the three major media mergers of 1995 was announced, when Time Warner Inc., itself the creation of a major merger six years before, said it was acquiring Turner Broadcasting for $7.5 billion.
The prominence, close timing, and multibillion-dollar valuation of the deals were attention-grabbing, and produced some predictable hand-wringing about the implications for American journalism.
Bill Kovach, then curator of Harvard University’s Nieman Foundation, declared in the New York Times in early August 1995:
“As the news about the mergers that are reshaping the television news industry continues to tumble out, public affairs journalism seems to have been swept away by America’s new mania for corporate bigness.”
As if “public affairs journalism” were thriving back then, a time of buyouts and rising prices in mainstream American media.
Not to mention a time of tunnel vision: As the Internet and World Wide Web were entering the mainstream 20 years ago, more than a few media executives found comfort in how puny the audiences for online news were at the time.
It is striking to look back and revisit the news coverage of the media mergers of late summer 1995 — and note how the Internet and its disruptive potential were scarcely mentioned. Indeed, the columnist Frank Rich predicted in the New York Times that Disney’s acquisition of Capital Cities/ABC would likely strengthen “homogenized mass culture.”
“As America becomes increasingly fractionalized politically, linguistically and economically,” he wrote, “mass culture may be the last common tongue we have. If the country will never rally around Bill Clinton or Newt Gingrich, then maybe an all-powerful Disney-ABC can provide the icons to unify us — much as Lucy and Desi served that purpose back in the era when a far smaller electronic arena could be dominated by [Bill] Paley’s relatively modest CBS.”
The Internet, and demand-driven consumer choice it enabled, soon enough took care of homogenized mass culture.
It’s not as if mainstream media were oblivious in 1995 to the threats posed by the Internet. As I discuss in my latest book, 1995: The Year the Future Began, representatives of eight major newspaper companies set up a partnership in April 1995 they called the New Century Network.
It “was meant to be a robust, collaborative response to the challenges the Internet raised,” I write in 1995. “As it turned out, New Century was emblematic of traditional news media’s confusion about the digital challenge.” The New York Times observed a couple of years later that the newspaper companies “formed the New Century Network to bring the country’s dailies into the age of the Internet. Then they sat down to figure out what that meant.”
New Century’s mission was never very clear and the venture lasted less than three years before collapsing. By then, it had come to embody “everything that could go wrong when old-line newspapers converge with new media,” Businessweek observed in its obituary for the ill-conceived partnership.
The spate of media mergers 20 years ago — driven in part by the easing of government regulations on networks’ producing and distributing their own programming fare — turned out to be preludes to even bigger deals, including the ill-fated merger of America Online and Time Warner.
The AOL-Time Warner deal was announced in January 2000, just as the dot.com bubble was about to burst. The combined entity faltered almost immediately: Integrating cultures of a new media company with an old-line giant “was problematic from the get go,” Fortune magazine observed, and less than nine years later, AOL was spun off. At that time, the combined AOL-Time Warner was worth about one-seventh of its value at the time of the merger.
Meantime, Westinghouse sold off its industrial properties and essentially morphed into CBS, which Viacom Inc. acquired in September 1999 for $35.6 billion. That at the time was America’s largest-ever media merger. CBS and Viacom split into separate entities at the beginning of 2006.
The only summertime blockbuster media merger 20 years ago not to come apart was that of Disney and ABC.
More from The 1995 Blog:
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