America Online -- the world's largest Internet company -- announced Monday that it is buying Time Warner, the world's largest media company. The marriage will create the world's largest media enterprise.
Tokyo's benchmark Nikkei average closed up 657.51 points or 3.61 percent at 18,850.92. Gains were led by high-tech stocks, which took a beating last week following sharp losses on the U.S. high-tech Nasdaq market.
"The opinion both in New York and Tokyo is that high-tech shares have seen enough correction and are ready to head higher," said Hirokuni Matsumoto, a trader at Yamatane Securities.
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But not all Asian markets were swept by the distant merger. Some remained wary over the prospect of U.S. interest rate hikes. And despite earlier optimism European bourses could extend their rally on Monday to welcome the marriage of new and old media, Britain's FTSE 100 opened 0.8 percent lower, led down by banks and British Telecommunications.
The new AOL-Time Warner will be a dominant force in the new century in producing entertainment and information, and delivering it to consumers. The purpose, says AOL chief Steve Case, is nothing less than "to create the first global Internet and communications company of the Internet century: AOL Time Warner."
CBS News Business Correspondent Anthony Mason reports the deal will create a media behemoth with over $30 billion in revenue. In the words of Christopher Dixon, an analyst at Paine Webber, "This deal really marks the comin of age of the Internet."
AOL, with its 22 million subscribers, will now get access to Time Warner's cable system, which reaches 20 percent of the country. "This is all about high speed access to information to entertainment and to purchasing all kinds of merchandise," says Dixon.
Across cable's high speed broadband wires, the new company will be able to promote and deliver an incredible portfolio of services: AOL, HBO, CNN, Warner Brothers films, Warner music and magazines like Time, People and Fortune.
"This merger will launch the Internet revolution," says Case.
Case will be chairman, Time Warner's Gerry Levin will be C.E.O. and Ted Turner will be third in command. Too many generals in the new army? Turner doesn't deny "that there's possibilities for some friction. But I don't think that's gonna happen."
Turner says he cast his 100 million shares for the merger whole-heartedly. "I did it with as much excitement and enthusiasm as I did on that night when I first made love some 42 years ago."
Competitors must now scramble to play catch up. But Levin and Case say they may make another move. "No, we're not done yet," says Levin. "Anything is possible," agrees Case.
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Inside the Time Warner media empire there was a whole lot of smiling going on Monday.
Time Warner's stock jumped 30-percent on the news. Media companies like Disney and CBS were also up sharply as investors anticipated more mergers ahead. The deal is so big, analysts say, that everyone has to reexamine strategies.
From now on, one media giant will have a lot to say about the information and entertainment available to you -- and the price you'll pay for it, reports CBS News' Jerry Bowen.
CBS News' Jerry Bowen reports.
It is the brave, new Internet world soon to pop up on your PC, a marriage of content and distribution that PC Week editor John Dodge says is a good thing. "It should be good news in that Time Warner's content can be delivered over America Online and there's so much of it. There's music, there's film, there's TV production," he says.
However, there are also potential problems. Critics say the merger will come at a price for consumers in the form of higher prices for products and Internet services.
There are questions about AOL and Time Warner's possible ties to AT&T through cable companies, ties that would let them dominate the lucrative business of high speed Internet access. That relationship could cost consumers even more, according to Gene Kimmelman of Consumers Union.
"In the long run, it inevitably means less choice, higher prices for consumers and, most dangerously in the media market, less opportunity to get the information points of view that consumers really want to have," he says.
Even supportive analysts concede hidden costs may be just a click away. "I think the people at Time Warner and AOL think of how it's going to be better for them before they think about how it's going to be better for consumers," says Dodge. "I think we have to wait and see. I think it's really hard to tell at this point."