Slashdot Mirror
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."
Into oblivion, I presume?
Brett
I don't believe that for one moment. The writing was on the wall for AOL anyways, and for much of Time Warner as well. Had they not merged, they still would have lost about the same amount between them. To think otherwise - to agree with the above quote - is to somehow believe that AOL would still be what it was in 1996, when they were providing dialup for millions, which is just silly.
Do you mean to tell me that you have the naivete to believe that the core of AOL wasn't an outdated business model when this merger happened? Face it. Turner didn't have a clue what he was doing, and he bought a timed bomb for which there was no way to disarm the fuze.
Ah, the joys of market bubbles. Seriously, this was primarily a Time Warner stumble. If I remember correctly, AOL was worth more than Time Warner at the time of the merger. Hence, "AOL Time Warner." In retrospect, that was ludicrous. It would have made as much sense for Time Warner to have changed it's name to "Time Warner.com" or something idiotic like that. It seemed that the most mundane business models, or no business models at all, were getting VC money because "it uses the internet." This, and the current recession, both serve to illustrate that business leaders often behave stupidly and are susceptible to hype.
Steve Case saved shareholder value for his AOL shareholders, the only people to whom he owed any duty. If, I don't know, Microsoft and GM were to merge, smart money would bet on Microsoft shareholders losing a LOT of money, but I would suspect GM's shareholders would be pretty happy with the deal. It all depends on how you define the loser.
Make love, not reality television.
Time Warner didn't "merge AOL into it", AOL merged Time Warner into AOL. AOL bought Time Warner, not the other way around.
There were several online services in dial up days. Originally, none of them were connected to the Internet. People who had different online services couldn't exchange email. There was Compuserve (the uber-Geek network), there was Prodigy (for not completely geek early adopters), and AOL (for everybody else). OK there were a couple of others, but you get the idea. You could only access content on the service you paid for. You could only send email on the same service. If you were on Compuserve and your friend was on Prodigy, no email between you.
AOL was the only one of these to truly make a profit. When AOL bought Time Warner, the latter was struggling with their business model in the new age of the Internet. The people who were the target market for the other online services saw that the writing was on the wall for AOL (partly because those services had already succumbed for the most part), but they had been saying that since 1994 and AOL had only gotten bigger and richer since then.
The advent of high speed Internet put the final nail in AOL's coffin, not even buying Time Warner could save it.
I'd forgotten how complicated this whole story was. There is about three more paragraphs of explanation, but I will stop here.
The truth is that all men having power ought to be mistrusted. James Madison
Thing is, I remember when it was first announced thinking that if it gave AOL access to Time Warner's content it was a great idea. But the thing is, it never really did. In the end none of Time Warner's companies ever really put their content out there (Standard MPAA/RIAA fears) and so AOL never got any content out of it. So while the merger had potential, neither side took any advantage of it at all. Now AOL is just a ISP basically, and Time Warner is still just another content provider trying to cling to the old ways while they figure out what this Internet thing is.
What I don't get is that in every circle I knew the AOL had been mud for a long, long long time. How disconnected from the real world do you have to be to merge with this turd of a company that everyone was cheering all the way to the bankruptcy courts? AOL was akin to some sort of naive ponzi scheme, its viability so dependent on easy-new subscribers that they probably have printed more CDs than Sony Music by now. It's just ridiculous. Back then AOL subscribers were like people still watching black & white movies without words in the year 2000 because they didn't know color 'talkies' existed.
Now, let's talk about the next big companies I want to fail, here's the top of my list:
- Sony (largely a has-been)
- Microsoft (could take awhile)
- GM (let it die, for god's sake)
- Citigroup ($1 per share = lols)
- Al Gore's media channel (he invented the internet)
- T-Mobile (horrible coverage)
- I would put Apple on here, but the iPod redeemed them in my eyes \ I broke down and bought one, and it works fairly well.
Anyone got any I missed that need to be aded to the list?
"I Don't Have Enough Faith to be an Atheist"