Case Study – Aol/time WarnerCase Study – Aol/time WarnerAOL Time WarnerOn December 14, 2000, the Federal Trade Commission approved the planned merger of AOL and Time Warner after both companies pledged to âprotect consumer choiceâ both now and in the future. The AOL Time Warner merger was approved by the Federal Communications Commission on January 11, 2001, and is the biggest merger in corporate history, then estimated at a total market value of $350 billion. The merger created a âpowerhouseâ of new and traditional media. AOL Time Warner has led the union of the media, entertainment, communications and Internet industries. Throughout the years the face of media and entertainment industries has changed drastically as a result of increased technology. The popularity of newspapers gave way to other forms of media and entertainment such as magazines, television, cable, music, and most recently the Internet.
The consolidation of the Internet is a significant part of a nationwide effort to protect consumers from the evils of globalization. As these two technology companies share a common goal of protecting consumers and innovating, they should benefit from a merger. Yet the most important factors are the location of a media outlet such as Time Warner, the timing of a merger and the size of the media business: all this helps to ensure good outcomes for consumers and will be in play when a merger occurs.
To fully appreciate the strengths and weaknesses of the Internet, we must explore the factors causing news services such as Forbes, Bloomberg and Huffington Post, to have the largest online outlets (and the largest readers, audiences and subscribers) in the United States. The combination of Time Warner, Fox News, BuzzFeed, CNN, NPR, CNN and many of the other newspapers, magazines and news websites is an unquestioned leader among news media and entertainment service providers and has a very high potential for success. Although Time Warner has the largest online market in America with a total market cap of $3.9 billion, the News Corp. has the largest online presence with a total market cap of $44 billion. News organizations and the networks can be expected to have large online viewers by merging with such an approach. This synergy brings together the diverse sources of local and global news information which have existed for decades.
We see potential in a merger but do not know it yet. Time Warner is the most obvious example. Since AOL had a separate merger with AOL, the two businesses were not able to merge directly. Although there is a large potential for a merger, the merger at both Time Warner and Time Warner would have had to rely on some combination of technology, not the merger itself. The combination could also have had to rely on other technology services that were created by other companies, such as Google. As a result, many traditional media companies had not been fully formed with the merger since 1999.
The merging of Time Warner and AOL would therefore have taken significant time.
In fact there are four possible changes that could have contributed to the consolidation: (A) consolidation would have shifted the ownership dynamics of both companies to the benefit of the public, (B) consolidation would have created opportunities for Time Warner and AOL, (C) consolidation would have increased the market for Time Warner’s digital news content and (D) consolidation would increase the market for AOL’s daily news news content.
The merger of Time Warner and AOL would not have had as extensive a effect as the merger at the same time as both companies had. Additionally, the merger at Time Warner would have not been related to national and regional news. Instead, Time Warner would have been expected to consolidate its online news operation in the United States. As Time Warner’s website grows, it can compete with existing news offerings from other networks such as Time Warner. The effect of consolidation at the same time would also have been somewhat large: its share value would have increased by almost 19 percent from 2009 to 2013.
The timing of a merger between Time Warner and AOL would have had some impact on the timing of news news. A merger between AOL and Time Warner simultaneously creates a significant, if short-term, risk. But the same would be true for competing for news revenue. That risk could be more significant if news service providers such as Bloomberg or Yahoo, owned by shareholders, merged with existing news distributors, and other media companies to compete in a market place where news should have been at the top of the agenda.
So it is important for both companies to understand the risk associated with a merger. The short-term risk associated with a merger
The Internet boom of the 1990âs gave rise to the popularity of America Online AOL and Time Warner saw themselves at a crossroads where old and new media would become one. The histories of both AOL and Time Warner are extensive and have not always been successful. Time Warner itself was created by two mega-mergers. The first merger was in 1989 between Time Inc., publisher of many magazines such as Time Magazine, and Warner Communications. Both companies have histories stretching as far back as 75 years or so. In 1996, this company merged with Turner Broadcasting, which brought CNN with its founder Ted Turner. These two mergers created a company ready to lead in any form of media. The company launched the HBO television network. Time Warner, headquartered in New York, had $27.3 billion in revenues in 1999 and a market value of $112.6 billion. On the other side of the merger there is new media giant AOL, today the biggest, richest, and most successful internet company in the world. It was founded in 1985 as Quantum Computer Services and by 1994, after changing its name, had a million subscribers. In its early years, it almost fell because of the problems associated with introducing unlimited access for a fixed monthly fee. As its number of users increased, so did its capacity problems, which made many customers angry because they could not get a connection. The problem was solved when AOL made a deal with MCI WorldCom, which led merge with its rival CompuServe.
In 1998, AOL acquired Netscape for $4 billion in a deal that knocked off its rival Microsoft. The company also had to keep away others, the largest of which was AT&T, which tried to take over AOL before it bought the cable company. AOLâs marketing campaign, sending CDs to millions of homes, paid off as subscribers steadily increased. In 2000, it had 24 million US subscribers, 2.8 million CompuServe subscribers, and 4.4 million international subscribers. Its revenues in 2000 were $6.89 billion, its profits $1.2 billion, and its market value $133 billion. During the 1998 Christmas season, AOL raked in $2.5 billion in online sales through its website, twice that of 1998 and 60% of all online Christmas shopping.
AOL Time Warnerâs enormous size could prove to be a disadvantage as well. Because the company is so big, its reaction time will be slower than that of smaller companies. This