September 16, 2014

Regulation, Media Mergers and the Consumers' Interest

Adam Thierer

Senior Research Fellow
Summary

Even when mergers don't make sense, the market does a better job than regulators of sorting the good from the bad. Remember AOL-Time Warner's 2000 marriage? Their shareholders certainly don't want you to.

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Leo Hindery Jr. gets it right when noting, "Consumers and viewers won't gain a thing from regulators blocking the media-distribution industry's natural evolution" ("The Absurd Opposition to Media Mergers," op-ed, Sept. 9). But he misses two of the most important reasons why Chicken Little-ism about media mergers is unwarranted.

Even when mergers don't make sense, the market does a better job than regulators of sorting the good from the bad. Remember AOL-Time Warner's 2000 marriage? Their shareholders certainly don't want you to. Regulators worried the sky would fall if they wed, but they divorced just a few years later after losing over $100 billion on the mega-flop. Likewise, News Corp 2003 deal for DirecTV was a disaster, and DirecTV was spun off after three years.

There is plenty of churn in the media world with old giants fading away and new players and technologies rapidly emerging. A decade ago nobody predicted that we'd be getting so much of our daily media diet from Google, Apple, Amazon, Facebook and other Internet services. Now the old giants have to play ball with them, and there's never been more competition as a result.

Regardless of who owns what, we're living in media's golden age, with unprecedented diversity and consumer choice.