You've got mail. And movies. And music. And magazines.
In the most dramatic instance yet of new media supplanting old media, America Online is buying Time Warner, the largest media and entertainment conglomerate in the world, for $162 billion.
The deal would be the biggest corporate merger of all time as well as an aggressive bet that online delivery of media is the wave of the future.
"This merger will launch the next Internet revolution," said Steve Case, America Online's chairman and chief executive, told a news conference Monday. "We're still just scratching the surface."
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Case will be chairman of the new company, which will be called AOL Time Warner Inc. and headquartered in New York. Time Warner chairman Gerald Levin will be its chief executive. Ted Turner, who owns 9 percent of Time Warner, will retain his title of vice chairman.
America Online shareholders will own 55 percent of the company, and Time Warner shareholders the rest. AOL Time Warner's brands would include AOL, CompuServe, CNN, Time, Netscape, TBS, TNT, Cartoon Network, HBO, Warner Music Group, Fortune, Sports Illustrated, Entertainment Weekly and Looney Tunes.
The deal values Time Warner at about $108 a share, a rich premium over its price of $64.75 a share before Monday. Time Warner shares soared 39 percent on news of the deal, climbing $25.31 1/4 to $90.06 1/4 a share on the New York Stock Exchange. AOL shares fell $1.75 to $72.
Analysts expect competing Internet and entertainment companies to seek similar deals in hopes of keeping pace with AOL and Time Warner, and some of those stocks also got a lift Monday. Disney jumped $4.81 1/4 to $35.93 3/4 and News Corp. rose $7.31 1/4 to 45.06 1/4 on the NYSE. Lycos leaped $9 to $79.75 and Yahoo! climbed $28.81 1/4 to $436.06 1/4 on the Nasdaq Stock Market.
The deal marks a major turning point in the media industry, highlighting the massive power and value that Internet companies like AOL have built up in a relatively short time.
America Online, based in Dulles, Va., has more than four times the net profit of Time Warner, earning $762 million in the fiscal year that ended June 30, even though Time Warner's revenues of $26.8 billion dwarf AOL's $4.8 billion.
In combining the leading Internet company with the leading traditional media company, the deal also shows that new media and old media need each other more than ever before.
AOL needed access not only to Time Warner's media content machine _ which produces films, music, TV shows and magazines _ but also to Time Warner's large network of cable TV lines, which is second only to AT&T's and reaches 20 percent of U.S. households.
Time Warner, like other major media companies, has been in the middle of a major effort to reinvent its own Internet strategy. Last year it set aside $500 million to invest in Internet opportunities.
With the AOL deal, Time Warner acquired an online platform of 22 million subscribers _ including CompuServe customers _ for delivering its content to computer users, a goal it has had for some time. "This really completes the digital transformation of Time Warner," Levin said. "These two companies are a natural fit."