Verizon Buys AOL, Now Owns HuffPost
Free Press’s Craig Aaron says narrow and short-term incentives created by Wall St. discourage corporations like Verizon from investing in internet infrastructure that would benefit the public.
SHARMINI PERIES, EXEC. PRODUCER, TRNN: This is The Real News Network. I’m Sharmini Peries coming to you from Baltimore.
Verizon, the telecom giant, announced Tuesday it will be buying AOL for $50 per share, which amounts to about $4.4 billion. This will give Verizon, known to us as our cable company, access to AOL content. For example, the Huffington Post is owned by them, and digital advertising. The acquisition gives Verizon an entryway into the increasingly competitive online video space. Verizon is the country’s largest wireless carrier, as well as an internet and TV provider. Joining me now to discuss this is Craig Aaron. Craig is coming to us from Washington, D.C., and he’s the president and CEO of Free Press and Free Press Action Fund.
Thank you so much for joining us today.
CRAIG AARON, CEO AND PRESIDENT AT FREE PRESS: Thanks for having me.
PERIES: So Craig, explain to us, what does this mean to us?
AARON: Well you know, this is yet another in a long series of mega-media mergers. I think what disappoints me about this deal is that, you know, Wall Street has really pressured and forced companies like Verizon to just try to get bigger and bigger and swallow up more companies and more of the competition, instead of actually incentivizing, encouraging them to invest in their networks.
You know, for the amount of money, for the $4 billion that Verizon is spending to buy AOL, they could actually extend high speed broadband service to many, many communities across the country. Communities like Baltimore, Boston, Buffalo, where you can’t get their fastest internet service. Instead, we’re seeing them buy advertising technology content, and we’re seeing more concentration. Wall Street loves it, but it’s not really that good for us as consumers, or certainly as a larger society.
PERIES: So Craig, this kind of consolidation organizations like yourselves have been fighting for years and years and years. Give us sort of fundamentals as to why you’ve been fighting it, and what does this leave us with in society?
AARON: Well you know, I think that you’re always concerned about too much power over information being held in too few hands. And definitely the public benefits with as many competing sources of information as possible to tell them what’s happening in their community, what happens in the country at large. And what we’ve seen happen over the last 30 years is going from maybe 50 companies that control most of what we watch, see, hear, and read every day, down to just a handful. And Verizon with this move is definitely trying to stay in that handful, but you’ve got the same company already controlling your access to the internet, controlling your cell phone, now getting their hand in the content business.
And I think there’s a lot of reasons for people to be concerned about that. Verizon is a company that doesn’t have a very good reputation when it comes to trying to do journalism and have that freely cover their own activities. And I think they’re a company that doesn’t have a very good reputation when it comes to privacy. We know about the spying and surveillance of your phone records. Certainly Verizon has been complicit in that, although their hand has obviously been forced as well. But here’s a company looking to make, to know even more about you. Tie all the things they know because they’re your phone provider, because they’re your cable company, to the kind of advertising they can offer over content networks.
So I think there’s a lot of unanswered questions about that that also speak to these larger concerns about media consolidation. As a citizen, as just a participant in this democracy, you benefit from independent sources of information competing for scoops, competing for news, not having it all under one roof. And I think a company like Verizon, we have to have questions. What happens to a previously independent source like the Huffington Post, like the tech blog Engadget that maybe took a critical view of Verizon’s activities. What happens when Verizon is the company that’s writing the cheques?
PERIES: And what does this tell us about our society? We’ve been fighting this stuff, and the government was supposed to prevent these types of mega-mergers from happening. Why were they not able to do that, and what kind of criticism are we receiving from the [inaud.]
AARON: I think there’s a, yeah, there’s definitely a mixed record. I mean, we did see the government step in here just a few weeks ago and stop the Comcast-Time Warner Cable merger, which was a much more dangerous merger than this one. AT&T, T-Mobile. There have been instances where things are just too big, and even the government can kind of wake up and step in.
Now, that’s been too far–not often enough. And so we had years and years I think of neglect, allowing these media companies to concentrate in fewer and fewer hands, and then suddenly you’re in a world where the only players are other big companies. And I think that’s what we’re looking at with a deal like this. You know, our antitrust laws aren’t really equipped to step in front of a deal like this, so I suspect it probably will go through.
But you know, the incentives are really upside down. If we’re looking at a world in which a company like Verizon is being discouraged from actually investing in its network, from actually providing infrastructure, from actually building high-speed internet that could benefit the whole country, lead all kinds of economic advancement, help us compete with the rest of the world, and instead because of the narrow and short-term incentives created by Wall Street you have a company like Verizon instead just chasing the next big deal that might offer a short-term boost to their stock prices.
So that’s–those are some pretty poor fundamental issues underlying a deal like this. And unfortunately, that’s exactly the kind of thing that Wall Street has rewarded instead of actually investing in the fundamental infrastructure that would benefit all of us. And make them plenty of money, too.
PERIES: And Craig, what’s next? I mean, they said they’re going forward with it, so they’re purchasing it. And then what will we as a consumer experience in the process?
AARON: Well it’s a little early to tell. You know, certainly–you know, I’m sure the Justice Department and others will take a look at this merger, and the immediate day one looks at it, don’t see a lot of grounds for them to stop this from happening. So I suspect this merger will go through. But there’s a lot of areas where individual consumers are going to have to really watch out for what’s happening.
I think one big area is the area of privacy. A lot of reasons to be concerned about what Verizon is doing with the information they capture. They were caught last year installing super-cookies on their phones, tracking where you were going online. Technology that you really couldn’t remove, you couldn’t opt out of. I think that’s very concerning when you’re talking about them then buying these sort of advanced ad technologies that AOL’s been developing.
I think you’ve also just got to be concerned about what is Verizon’s role as the boss, as the editor here, going to be? Just last year they tried to start their own tech news site called SugarString. When they put the word out about what kind of stories they wanted, they were very clear that they didn’t want any stories about net neutrality, they didn’t want any stories about surveillance, they didn’t want any stories about any area where Verizon was up to no good. You know, are we going to see that start to leak into places like the Huffington Post, TechCrunch, Engadget, these news outlets, reputable news outlets, that they will now own. I think real concerns about are there going to be walls there protecting the editorial independence of those outlets from corporate headquarters.
PERIES: Craig Aaron, president and CEO of Free Press. Thank you so much for joining us today.
AARON: Thank you.
PERIES: And thank you for joining us on The Real News Network.
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.