Just a month short of their decade
long merger, Time Warner, the
US media conglomerate, and America Online (AOL), the
company which pioneered the Internet, engineered the largest merger in
American corporate history (and which also botched it), broke off last month
after Time Warner decided to let off Aol. (as AOL rechristens itself now) from
its umbrella. The alliance, which was solemnized in the most astounding
circumstances, was described as the "single most transformational
event", by Silicon Valley's Venture
Capitalist Roger McNamee, was valued at a whopping $350 bn at the height of the
dotcom bubble in 2000. Gerald Levin, the then Chief Executive of Time Warner
and AOL's boss Steve Case, believed that in this rapidly mutating economy, the
deal was in some ways inevitable. While AOL, a newbie-friendly face of the
web that was three years ago in an operational mess, had managed to build
a strong consumer base and wanted to expand its business through
dial-up connections in a period where Internet was becoming a commodity than a
service, made a fortune through its alliance with Time Warner.
However, after a decade-long relationship during which the duo failed
to stitch together a viable strategy to reap the rapidly growing Internet
business, even as Google continued to annihilate rivals and scale new heights of glory,
as AOL failed to predict that broadband was set to topple the slow-dial-up
modems in future, the writing was on the wall. Fed up and frustrated after
sinking hundreds of billions of dollars in keeping the alliance together and
that saw its stake deplete less than $2.8 bn, Time Warner finally took the
decision to spin-off the troubled Internet company Aol. A repentant Levin, the
chief architect of the deal and the then CEO of TW, acknowledging his fault said,
"I presided over the worst deal of the century."
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