Welcome To The 21st Century

On the surface, it looked like just another awesome megadeal. There were the top executives up on stage, palling around like local-TV anchors--and assuring everyone that this would be a merger of equals, a careful blending of two companies, two cultures. But make no mistake: America Online is the acquirer. The trading symbol for the new company, tellingly, is AOL.

Given the realities of the New Economy, it could hardly be otherwise. By now, the pattern is clear: The digital will prevail over the analog, new media will grow faster than old, and the leaders of the Net economy will become the 21st century Establishment. If the ascendance of the Net economy were not clear already, the Jan. 10 announcement of America Online Inc.'s $183 billion deal to purchase Time Warner--the biggest deal ever--should be taken as proof positive. AOL has just one-fifth the revenue and 15% of the workforce of Time Warner, itself the combination of publishing and entertainment empires that have been fixtures in America culture since the 1920s. But with a New Economy stock that investors valued at nearly twice that of the Old Economy icon, AOL had the resources to be the buyer, not the bought. "The deal shows the torch has passed," says Bruce Leichtman, director of media and entertainment strategies at research firm Yankee Group.