AOL Time Warner Final Paper-Marena Bronson

AOL Time Warner Final Paper-Marena Bronson - AOL Time...

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AOL Time Warner: A Closer Look at the Largest Media Merger in History America Online has been confounding its critics since its initial launch in 1989. Silicon Valley programmers laughed at its cheerful user-friendliness, some even nicknaming it, “America on training wheels” (Borrus). When free Internet service providers entered the market, many industry analysts predicted it would be the end of AOL, which charges a monthly subscription fee of $21.95, but they were wrong. AOL survived the dot-com meltdown and has more subscribers then ever, while many of its competitors were forced to close their doors or began charging subscription fees of their own. The company is one of the hottest companies to emerge from the Internet, and with its acquisition of Time Warner, Inc., AOL has become one of the world’s most powerful media companies. When the all-stock transaction was announced January 10, 2000 it was the biggest merger in corporate history, a marriage of old-and new media-titans. A lot has changed since the two companies announced the deal. From the wealth perspective, the merger was worth $183 billion on the day of the announcement. Over the past year, the combined companies have dropped in value to $112 billion, as stock prices of both companies declined ( Guardian Newspapers ). Wall Street analysts blame the evaporation of investor confidence in the Internet revolution and the rapid deceleration of the U.S. economic growth for taking some of the “gloss” off the deal. Still, the merger “represents a seminal event in corporate marriages” bringing together the world’s dominant Internet service provider with about 29 million subscribers worldwide, and the 1
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venerable Time Warner brands, including Time magazine, CNN, HBO, Warner Brothers films and the nation’s second-largest cable provider ( Guardian Newspapers ). After more than a year of battling with bureaucrats, competitors, and Internet advocates on both sides of the Atlantic, AOL Time Warner cleared its last regulatory January 11, 2001, when the FCC officially approved the merger. That may have been the easy part – now they’ve got to make it work. The media giant faces the daunting task of making good on its promise to dramatically transform the advertising and media landscapes – in the words of AOL Time Warner’s chairman, Steve Case, “lead the convergence of the media, entertainment, communications and Internet industries” (CNNfn Staff Reporters). Although most agree the mega-merger has tremendous potential, many obstacles remain. When AOL agreed to take over Time Warner the dot-com world had not yet melted down, advertisers had not started withdrawing from AOL’s Web sites, Turner Broadcasting’s cable networks, and Time Inc.’s magazines, and spending on developing businesses was still considered a good thing. “A year ago all you saw were the opportunities,” said an executive at one Time Warner division. “Now you see all kinds of downsides” (McConnell and Higgins). AOL Time Warner is under tremendous pressure to show positive results almost
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AOL Time Warner Final Paper-Marena Bronson - AOL Time...

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