The incredible growth of the computer industry led to increased business consolidation, making it possible for large firms to communicate instantly within the United States and throughout the world and to keep control over their far-flung operations. In addition, the federal government aided the merger process by relaxing financial regulation. Media companies took the greatest advantage of this situation. In 1990 the giant Warner Communications merged with Time Life to create an entertainment empire that included a film studio (Warner Brothers), a television cable network (Home Box Office), a music company (Atlantic Records), a baseball team (the Atlanta Braves), and several magazines (Time, Sports Illustrated, and People). Before Warner Communications combined with the Internet service provider America Online (AOL) in 2006, it had topped $21 billion annually in sales. Several other media conglomerates formed during this period as well. The Australian-born Rupert Murdoch, who already owned considerable holdings in his home country and in Great Britain, moved his operations to the United States. Murdoch soon purchased the Fox Broadcasting Company to go along with a satellite dish company; a movie studio; a variety of newspapers, including the New York Post and the Wall Street Journal; and thirty television stations. Media mergers mirrored the trend in the rest of the economy. The estimated number of business mergers rose dramatically from 1,529 in 1991 to 4,500 in 1998. The market value of these transactions in 1998 was approximately $2 trillion, compared with $600 billion for 1989, the previous peak year for consolidation.
Corporate consolidation brought corporate malfeasance, as some chief executives of major companies abused their power by expanding their companies too quickly and making risky financial deals, which put workers and stockholders in jeopardy. Such practices led to a number of scandals, including one involving Enron. Enron was the product of a merger in 1985 between Houston Natural Gas and InterNorth, a gas company headquartered in Omaha, Nebraska. Operating out of Houston, Texas, Enron benefited from the deregulation of the gas and electric industry in the 1990s, which brought exorbitant profits and encouraged corporate greed. As Enron thrived, its prices shot up and its stock soared, earning the company more than $50 billion in 2001. In October of that year, information began to trickle out about insider trading, faulty business deals, and questionable accounting practices. As these revelations mounted, Enron’s stock and its credit rating plunged, jeopardizing the solvency of the company. In December 2001, the once mighty Enron filed for bankruptcy and fired four thousand employees; its top two executives were subsequently convicted on charges of criminal fraud. This scandal affected companies beyond Enron, leading to the conviction of executives from Enron’s accounting firm, Arthur Andersen, and another Andersen client, WorldCom.