Time Warner Confirms Split With AOL

ausekilis writes "Many outlets are reporting that Time Warner has confirmed plans to spin off AOL. All that's left to deal with are a few financial hurdles, such as buying out Google's 5% stake in AOL. The interesting part of the story is that both AOL's CEO and Time Warner's CEO said effectively the same thing, that AOL will be better off as an independent unit, as opposed to 'a cog in the Time Warner wheel.' Interesting to note that when they originally merged, the idea was for AOL to be a one-stop shop for all your internet goods. Makes you wonder what would have happened if Time Warner had invested in AOL as an exclusive media outlet for movies, TV, music, etc. Perhaps AOL would have regained some speed and become the prominent household name it once was, instead of being that company who sent us all the free coasters."

Comments

The move to social networking.

[MrCrassic]

I agree with those at America Online that think that as of now, it's best suited for a vertical move to social networking. It's internet connectivity model has been stagnant for a long time, but it's social networking features are strong and have room to improve. (AIM is the quintessential example of this.)

However, I feel bad for those that still work at the company, and users still chained to their internet services for some reason or other.

Chat Giant

[Haxx]

    Plenty can be said about the cons of AOL such as the software being classified as a virus. There was a time period from 1996-2003 when AOL chat rooms had hundreds of thousands of participants 24 hours a day. For us introverts it was a social mecca.

Re:Chat Giant

[Miseph]

In the beginning? Virtually none. Bots were something of a novelty, and spamming hadn't become profitable enough for the spammers to proliferate like they do today. There were a lot of users, well established conventions against that sort of thing, and reasonably effective ways for the legitimate users to police things for themselves. Then it got too big and unwieldy, and the bot authors and spammers got too clever, then the actual number of users started to plummet with the advent of broadband and the whole thing degenerated into what it is today.

Honestly though, I was big on AOL chats well into 1999, and those really weren't major problems until the very end. Of course, I also didn't use the default rooms, which saw those problems arise much earlier for a variety of reasons (the non-defaults may have been filled with lame script-kiddies, but the front page rooms were always filled with complete noobs).

Ted Turner: The merger was "better than sex".

[Futurepower(R)]

"Do we really need those all-inclusive portals anymore?"

There was never a need for all-inclusive portals after the arrival of the internet. AOL was trying to keep less-knowledgeable people inside its own sites, and away from the internet, so it could make more money from its ads. For years, and I suppose even now, an AOL email address meant that the owner of the address didn't have any technically knowledgeable friends.

The 88 BILLION dollars lost when Time Warner bought AOL has been considered to be the worst business decision of all time. Maybe the French selling the Louisiana Purchase to the U.S. government was a worse decision. But, if we include decisions made by government, then even the U.S. invading Iraq lost more money.

At the time, even people with little technical knowledge knew that AOL was not a good company to buy.

Time Warner's CEO, Gerald M. Levin, who made the decision, called himself an "imperial CEO". He made huge amounts of money, and didn't seem to care that he caused enormous troubles for his company, and for all its employees that owned stock.

Just before the merger, Ted Turner called the merger "better than sex". The problem continues, of course. People with no technical knowledge assume that, if they don't know something, there is nothing to know. Technically knowledgeable people get amazingly little respect.

Re:Ted Turner: The merger was "better than sex".

[Un pobre guey]

This is not getting much press. At the time of the merger, it was abundantly clear to everyone who was paying attention that it was not just a colossally dumb idea, but a massive scam carried out by one of the craftiest con artists of our time. AOL was already a dog by then, falling rapidly out of favor even among its natural user base of technically uninformed people. The huge payoffs for those immediately involved in the deal were by far the most important driving force. It must have been obvious to them at the time that it was a shit deal, but the short term payoff was so powerfully compelling that they went ahead anyway. How it hasn't been found to be fraudulent is beyond me, but then again the people who make these deals know what side the bread is buttered on. It is that kind of complicity that keeps the financial industry together. We have seen that on more than one occasion in the recent past.

Re:AOL==coasters

[Anonymous Coward]

Actually, one of the main reasons for AOL's steep decline after the merger was that Time Warner used all the positive cash flow from AOL and invested virtually nothing back into AOL future planning and infrastructure. That would kill just about any successful company.

Had the merger been a couple of years later, when most folks got broadband, then Time Warner could have used AOL to distribute their content. At dial up speeds, there wasn't much in it for AOL. And by the time most folks moved, AOL was suffering badly. Verizon giving away MSN free to their DSL customers was another nail in the coffin. Distracting moving ads were another. Having a small portion of the screen visible for messages in webmail was another. (as were the AOL customer service people who didn't cancel contracts...in fact, attempts to retain customers backfired, instead of trying to keep the service good.) Another nail was the virtual abandonment of their business customers, and the catering to grandmas and young teens. IMAP was (and is) good, even .mac copied it.

Perhaps now, without Time Warner, AOL might be able to move forward and actually attract people, instead of attempting to trap them. That is, if not all the good people have already left. I know some that have.

Re:Coasters?

[Anonymous Coward]

I used them to hide porn from the rents.

AOL was WHAT?

[argent]

"Perhaps AOL would have regained some speed and become the prominent household name it once was, instead of being that company who sent us all the free coasters."

They were ever anything else?

I always saw AOL as the online service for people who didn't want to type. Was there ever a time AOL had, like, actual street cred?

Re:AOL was WHAT?

[afabbro]

"Perhaps AOL would have regained some speed and become the prominent household name it once was, instead of being that company who sent us all the free coasters."

They were ever anything else?

I always saw AOL as the online service for people who didn't want to type. Was there ever a time AOL had, like, actual street cred?

Street cred? If you mean "cool", then no. However, there was a time - in fact, quite a long time - before the Internet was open to the public. I used CompuServe and GEnie from the mid-80s through the early 90s. Most people I knew used Prodigy, AOL, etc. All of these were subscription services where you signed up for dial-up access.

The idea of an "ISP" - one that simply provided you the same connectivity as anyone else - didn't come along until the mid-90s or perhaps a little later (at least in terms of widespread availability). Prior to that, it was only walled gardens...you signed up for CompuServe, you could only talk to people on CompuServe, you used CompuServe modem banks to dial into, you had access only to CompuServe content, etc. Ditto for AOL, Prodigy, etc. They eventually adapted so you could email from CompuServe to AOL, but this was much later.

AOL is being spun off? By their subsidiary?

[pthisis]

Isn't that _backwards_? I mean, I know AOL is a laughingstock now, but they paid $164 billion to purchase Time-Warner in 2001. AOL bought Time-Warner, not the other way around. Doesn't the owner spin off the subsidiary?

It was a brilliant move by them at the time to turn Internet bubble money into real money.