Aol & Time Warner Merger
A decade ago, America has witnessed its biggest merger of their history when AOL and Time Warner merged for an all stock deal with a combine value of $ 350 billion which also created the world’s largest media and Communication Company, but today I want to re-examine this ill-fated deal and try to explore what went wrong. In an initial statement about this merger and probabilities of new company it was stated that this merger will lead to a speedy development and growth for all its businesses. It will not only provide AOL a new broadband interactive platform, but the companies can also grow their revenue through cross marketing from movies, music, and internet to telephone.
Unfortunately, instead of delivering according to the promises made, the merger turns a disaster, which brings a loss of almost $ 100 billion in shareholder value. In my opinion the new company has so many management issues for example; lack of long-term planning, inferior product development, difference in organizational culture which is more prone to imitation then innovation, and most important of all the main players of the deal Mr. Gerald M. Levin (chief executive, Time Warner) and Mr. Stephen M. Case (co-founder of AOL) fail to transform their passion and vision to their people.
Before I move any further let’s rewind the whole scenario, and look at the history of the companies as well as the market situation before merger and the reason for the merger;
History of Time Warner
Time Warner belongs to four Warner brothers, who somehow convinced their father to sell his golden wristwatch to buy cinematographs. This was the start of their film journey. In the beginning they use to show films on that cinematograph to the farmers in rural areas and later they register themselves in Hollywood in 1923 and started producing their own movies in 1925, in 1930 they launched their cartoon serious which went very popular among public. The name of their popular cartoon series are Bugs Bunny and
Unfortunately, instead of delivering according to the promises made, the merger turns a disaster, which brings a loss of almost $ 100 billion in shareholder value. In my opinion the new company has so many management issues for example; lack of long-term planning, inferior product development, difference in organizational culture which is more prone to imitation then innovation, and most important of all the main players of the deal Mr. Gerald M. Levin (chief executive, Time Warner) and Mr. Stephen M. Case (co-founder of AOL) fail to transform their passion and vision to their people.
Before I move any further let’s rewind the whole scenario, and look at the history of the companies as well as the market situation before merger and the reason for the merger;
History of Time Warner
Time Warner belongs to four Warner brothers, who somehow convinced their father to sell his golden wristwatch to buy cinematographs. This was the start of their film journey. In the beginning they use to show films on that cinematograph to the farmers in rural areas and later they register themselves in Hollywood in 1923 and started producing their own movies in 1925, in 1930 they launched their cartoon serious which went very popular among public. The name of their popular cartoon series are Bugs Bunny and
Bibliography: Internet Sources: 1. http://www.nytimes.com/2010/01/11/business/media/11merger.html?hp 2. http://marketplace.publicradio.org/display/web/2009/05/28/pm_time_warner/ 3. http://www.time.com/time/business/article/0,8599,1901508,00.html 4. http://www.nytimes.com/2009/05/29/business/media/29warner.html?_r=1 Text Book: 1 Mergers, Acquisitions, and Corporate Restructurings. By Patrick A. Guaghan.