Did the internet kill the news business - abruptly and from far away, as a meteor onslaught may have killed the dinosaurs? Or was it subverted gradually from within, with a little help from Wall Street? This year marks the 10th anniversary of the largest corporate merger in history, a US$175 billion (Dh642.77bn) marriage between America Online (AOL) and Time Warner that was annulled last month after the combined value of the two companies had dwindled to a seventh of what it was when the deal was announced.
As with the bundled-asset craze that lured in and then burned investors, the trophy wife AOL of the 1990s turned out to be artificially enhanced. If the estrangement within AOL Time Warner was the byproduct of the fevered imaginations of Wall Street, the 2008 credit crisis was testament to its short memory. The consequences of the 1990s tech boom and bust will in many ways prove more lasting and profound than those of the global downturn. Despite the abuse of derivative products, leverage will survive.
The same cannot be said of the mainstream media, which has been forever diminished by the wholesale concentration of the news industry throughout the 1990s, as one multinational company after another gobbled up media properties. Whether they were distributors such as AOL, or content providers such as the National Broadcast Company, one of America's oldest television networks, Wall Street reacted joyfully.
The consolidation of media ownership was perceived not as an emerging behemoth that would one day stand accused of commoditising culture and trivialising news reporting, but as a profound expression of the free market. Dissenting voices were rare and confined largely to the political wilderness. In late 2001, the left-leaning weekly magazine The Nation warned that any brewing media monopoly would interbreed news and entertainment to pernicious effect.
"Of all the cartel's dangerous consequences for American society and culture, the worst is its corrosive influence on journalism," the magazine warned. "Under AOL Time Warner, GE, Viacom et al, the news is, with a few exceptions, yet another version of the entertainment that the cartel also vends non-stop." It was a plaintive and prophetic glimpse into journalism's future. Many believe the Columbia Broadcasting System's once-leading nightly newscast, for example, was ruined by its former parent company, the entertainment giant Viacom.
The Time Warner-affiliate CNN, meanwhile, pioneered the 24-hour news cycle that reduces complex issues, particularly those relating to international affairs, into scripted morality plays that distort and titillate more than they inform. The joining of journalism and show business did little for Big Media, however, which for much of the past two decades has underperformed the Standard & Poor's 500 Index.
To make matters worse, the extravagant buying and selling of the 1990s left the industry exposed to the wrecking ball that would become the World Wide Web. Take Rupert Murdoch's News Corp, for example. It reported a net loss for fiscal 2009 of $3.4bn due in part to digestive problems associated with its $5bn purchase two years ago of Dow Jones and its flagship, The Wall Street Journal. Blame not the internet for the demise of the news industry but its consolidation at the hands of impresarios and the ruthless pursuit of shareholder value.
As the media experts Jonathan Knee, Bruce Greenwald and Ava Seave note in The Curse of the Mogul, the appetites of men such as Mr Murdoch and Sam Zell, assisted by an erosion over the years of anti-trust legislation, have turned the news industry into a wasteland that has done little to sustain the interest of consumers and even less of its trust. "The introduction of the internet has only accelerated this trend of value destruction among incumbent media players, without creating many profitable newcomers," the authors note.
Last week, Jamie Dimon, the chairman and chief executive of JPMorgan Chase, testified with the heads of Wall Street's three other major investment banks before a congressional committee investigating the causes of the credit collapse. When asked whether his bank was "too big to fail", Mr Dimon said there were many large companies in the world and they needed large banks to finance them. If Mr Dimon's response was a shrewd way of passing the buck, it was because America's media lords have made it so easy for him to do so.
What Daedalus's waxed wings did for his son Icarus, Wall Street financiers did for the media moguls and the news industry. @Email:firstname.lastname@example.org