Time Warner To Spin Off AOL

Hugh Pickens writes "Time Warner is inching closer to untangling one of the worst mergers in American corporate history that began with the merger of Time Warner with America Online, a deal that has resulted in the evaporation of more than $100 billion of shareholder value. "Although the company's board of directors has not made any decision, the company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner's stockholders, in one or a series of transactions," Time Warner said in the filing. Tech industry analysts have speculated for years that Time Warner would spin off AOL; the two companies merged in 2001 with the idea that AOL's strengths as a new media company could benefit an old media company like Time Warner, and vice versa. But few synergies ever arose from the marriage and even AOL founder Steve Case, who is no longer with the company, has said that he believes the two companies should be separated."

Comments

"Dot com" just did not compute for them.

[az-saguaro]

You are completely right, but they never would have changed their name to "Time Warner.com or something idiotic like that". I don't think that "dot com" really meant anything to them; they really didn't understand how the world was changing. They were stuck on the AOL way of doing things, which was most definitely NOT "dot com".

Part of that whole mess was just raw psychology: hubris, blindness, old fogeyism, and getting run over by the bullet train of market reality. In the period circa 1998 - 2001, Win 98, Internet Explorer, DSL, cable broadband, and the dotcom boom all turned the world en masse to the real Internet. While AOL saw opportunities in the Internet, it was so tied to its own version of online services, a glorified dialup bulletin board service, that it never saw where the rest of the world had suddenly detoured to. The AOL - Time Warner merger came after the ascendency of AOL, as they were starting to become irrelevant.

Hubris - thinking that flash-in-the-pan AOL could take the leadership role from well-established and dependable multimedia Time-Warner. Blindness - letting their hubris and rose-colored vision mask what was happening with the real Internet and ISPs. Old fogeyism - believing that their traditional ways would prevail, as the whole world was giving up roller skates for sports cars.

Not surprisingly in retrospect, but perhaps not predictable at the time, is that consumer tastes in the media itself changed. Time Magazine and Turner Classic Movies remain important, but who then necessarily realized that the likes of YouTube, FaceBook, the blogosphere, and all of their forebears of the time would divert attention from classic print and TV media.

At that time, they just didn't get it, what "dot com" was really all about. They were all going to lose value anyway, but kudos to Steve Case for sucking something out of the stodgy and clueless old guard - like it or hate it, you gotta admire it.

Re:Hindsight is 20/20 -now look at facebook &

[phantomfive]

I did some research into this, and despite growing costs, Facebook claims to be cashflow positive, which surprised me. So maybe they will make it.

Same can't be said for Twitter, which at the moment has exactly $0 revenue, and is proud of it. Idiots.