AOL Time Warner has rechristened itself as `Time Warner' recently. Is this move a precursor to AOL's spin-off?
AOL Time Warner, the media and entertainment powerhouse, formed as a result of the merger between the online giant, America Online (AOL) and the impressive Time Warner group has dropped `AOL' from its corporate name in September this year. Coming as it does amidst hordes of problems at the merged company, the move cannot be dismissed as just another name change. There is a great symbolic significance attached to this move and many see it as a precursor to the spin-off of the troubled online division.
The
merger of AOL and Time Warner was the biggest merger
in America's corporate history. It is just a step short
of proving to be the biggest strategic disaster now.
The much hyped media merger of $166 bn was announced
in January 2000 and was completed exactly a year later.
The merger was the high point of the Internet bubble,
when a brash, upstart AOL, a poster boy of the Internet
era `bought out' the old media tycoon Time Warner using
its `stock' as the currency. The merger was supposed
to give AOL access to Time Warner Cable and also to
the massive content. For Time Warner, the merger was
seen as a means to make a foray into the Internet era.
Many hailed the merger as the triumph of the Internet
and applauded the `merger of equals'.
The
ambitious executives of both the companies saw enormous
synergies coming out of the merger in terms of cross-selling,
expanded reach, increased content and improved delivery.
Huge cost savings too were predicted. There were fears
of an antitrust squabble but the merger finally got
a go ahead from both the FCC and the FTC in spite of
intense lobbying by competitors. Steve Case, the CEO
of AOL was to become the chairman of the combined company
and Gerald Levin, Case's counterpart at Time Warner
was designated to be the CEO. Bob Pittman, Case's number
2 at AOL and Richard Parsons, from the side of Time
Warner were to be the co-chief operating officers directly
reporting to Levin. Every thing was just perfect for
the good times to begin. But alas, the going was not
smooth; at least not in the first two years. |
