Time Warner

History

There has been some debate as to what led to the merger. On the side of Time Warner, the CEO was very concerned (like many CEOs of the time) of the possibly radical change to business that the internet would enable. He sought to interanlly develop Time Warner internet initiatives but was frustrated at the lack of progress. He saw a merger with AOL as acellerating this process. Many business journalists have reported that internally at AOL, the main reason for the merger was that AOL executives felt that its stock price was severly overvalued (and implied a growth in profits that was impossible) and that the stock price would collapse without a big merger.

The merger faced immediate opposition by consumer groups and other media companies in part due to fears over monopoly issues especially due to vertical integration. Media companies felt that the new AOL Time Warner would only feature Warner Brothers movies on its AOL service, and in its magazines for example. In other words, that it would censor competitors advertising and cut off a huge area of media from them. This had always been a more limited possibility all along with Time Warner, but Time Warner was notorious as that all of its divisions were run essentially seperate with almost total independance. Media companies feared though that this would change when AOL executives were brought aboard.

Consumer advocates were primarily concerned with the impact of the possible product tying between Time Warner's cable TV systems and AOL's internet service. At the time it was thought by many that interactive or internet enabled TV was going to become very popular. Consumer groups saw that this as a possible attmept to corner the market by AOL, which could force all of the Time Warner cable subscribers to use AOL branded Internet-TV. The initial impetus for most of this opposition however came from small Internet Service Providers, who felt that AOL would essentially tie its Internet Service with Time Warner's cable modem customers. These ISP's wanted to be able to be a service provider option for Time Warner's cable internet customers. AOL and Time Warner pledged not to do this at the time of the merger.

Many analysts and reporters were also concerned that a smaller (but more highly valued) company less then 15 years old was aquiring a large media corporation with a long history. This was possible because mergers are often performed by companies exchanging stock shares with one another (in a process called pooling of interests. Since AOL's stock price (and thus its market capitalization) was so high, it was able to aquire Time Warner while paying a small premium.

Post merger history
After the merger was announced, AOL executives immediately began trying to change the direction of the combined company. Although AOL's CEO Steve Case was made executive chairman, while the Time Warner CEO remained CEO of the combined company, most of the changes were pushed by AOL's powerful advertising sales deparment. This department had been a large factor in the business sucsess of AOL (through both agressive sales tactics and frauduland financial accounting). It attempted to achieve some sort of synergy, or partnering, between the various areas of the new AOL Time Warner (such as the magazines, the television stations, and the ISP). It began selling advertising deals as a package, where a company could pay for ads appearing on television stations, magazines, and America Online, all at once. The America Online ISP division however, continued to decrease in profits every quarter. Because of this poor performance, and because of the collapse of the stock valuation of similar internet companies, accounting rules required that the internal value of the business on the balance sheet (known as goodwill), be subtracted from the balance sheet. This subtraction (or "right down") caused AOL to report a loss of 99 billion dollars in 2002, the largest loss ever reported by a company. This led to the company changing its name back to Time Warner, and removing Steve Case as an executive chairman. The CEO was replaced by a Time Warner executive named Richard Parsons. A number of assets were sold. The professional wrestling federation WCW was sold to competitor WWE. The Atlanta Hawks, Atlanta Thrashers, and operating rights to Philips Arena were sold in mid-2003. The fifty percent share in the cable channel Comedy Central was sold to Viacom and AOL/Netscape's longrunning litigation against Microsoft was settled out of court.Warner Music Group, a music company, was sold to a group of investors led by Edgar Bronfman, Jr in late 2003. In 2004 Time Warner announced that it was shutting down its CNNfn financial information channel and disposing of its share in Google.

Since 2003, the Time Warner text logo appears in CamelCase form (ala RadioShack).

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