The Aol – Time Warner Merge – Why Being a Successful Business Doesn’t Guarantee Success

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  • Topic: Time Warner, Dot-com bubble, Warner Music Group
  • Pages : 6 (2106 words )
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  • Published : February 22, 2013
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Assignment title: Change article
Assignment subtitle: The AOL – Time Warner merge – why being a successful business doesn’t guarantee success The article is addressing: personal factors influencing the adaptation of change Word count:

The AOL – Time Warner merge – why being a successful business doesn’t guarantee success This article describes the merge of two large concerns in the US when the Internet was an upcoming business. America Online is a global Internet company that provides the services of buying products online. They started with music and games and added the ability to interact with those who play online to their product mix. This company was a new and innovative company in contrast to the more traditional company Time Warner. Time Warner was originally founded in 1976 of parent companies Warner Bros. and Warner Music group. The Warner Corporation was seen as the worlds’ largest media company and had operations in film, publishing and television. The intent of the merger was to combine the force of the new technology of Internet with the large database of entertainment. In their press release they stated: "The world's first fully integrated media and communications company for the internet century." In the late 90’s both companies thought of creating a successful leading company, which resulted in a split up in 2009, not even ten years later. What was the nature of this merger and where did it go wrong? It all started in 1999…

This could happen because of the biggest bubble on the stock market ever, and people were very positive of running businesses on new technologies. Many young entrepreneurs were setting up Internet companies that were worth billions, and everybody wanted to be a part of it. It was in the 90’s that everybody realized the Internet was there and it brought success with it. Many consumers and businesses would be on the Internet, to step in onto the bubble. The two leading men of the companies AOL’s - Mr. Case and Time Warner’s -Mr. Levin met in the fall of 1999 during a talk at the 50th anniversary of the people republic of China. They discussed during a conversation how it would be to merge the two companies. After a few conversations between Mr. Case and some Time Warner board members and later with Mr. Levin, AOL called TW’s Mr. Levin to hint at a possible merger. But in fact, Mr. Case, already made some secret plans for months about how to use its high-priced stock to make a big acquisition. Mr. Levin responded that Time Warner was not for sale. However, after a while the philosopher chief executive of Time Warner, Mr. Levin and the co-founder of AOL, Mr. Case met again in a hotel to talk their strategic thoughts about the merger. Both sides gathered their negotiating teams, together with bankers. On the side of Time Warner only a small group of people were involved at this stage. Over the weekend, the deal was sealed early January 2000 during a dinner at Mr. Case his private house. As the negotiation was about an equal merger, it turned out to be AOL owning 55% and left Time Warner with 45%. Mr. Levin would be chief executive, and Mr. Case would be chairman, with an equal number of directors. It was a miracle that the progress of the deal was not leaked to other departments or people yet. Only hours before the big announcement the two started to inform their executives, with a non-personal conference call at 8 o’clock in the morning and no one was pleased to hear the news. Describing a rough start for the other employees of both companies became an indication of their future business.

The merger was arranged in a couple of months. It took only a few years to see the results of not fulfilling the prophecy of the dream that Mr. Case and Mr. Levin had. The fact that AOL held 55% of the whole company actually meant that it was an acquisition instead of a merger. The success of AOL was based on that Internet bubble, and predicted that Time Warner could ride along. It didn’t...
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