Time Warner, AOL Splitting Up

Failed Mega-Merger Ends As Time Warner Spins Off AOL As Separate Company

(AP)  Time Warner Inc. is dumping AOL after spending nearly a decade trying to build a new-age media empire only to wind up in a weaker position than when the marriage began.

The divorce, announced Thursday, will spin out AOL as a separate Internet company run by former Google Inc. advertising executive Tim Armstrong. He was hired in March to try to restore the luster to a brand once known as America Online.

Time Warner owns 95 percent of AOL and will buy out Google Inc.'s 5 percent stake during the third quarter. From there, AOL will be spun off into a separate publicly traded company around the end of the year.

"We believe AOL will then have a better opportunity to achieve its full potential as a leading independent Internet company," Time Warner Chief Executive Jeff Bewkes said in a statement.

The $147 billion deal in which AOL bought Time Warner in 2001 epitomized the mind-boggling wealth created during the dot-com boom and quickly became one of the worst corporate combinations in history. In 2002 and 2003, Time Warner absorbed nearly $100 billion in charges to account for the rapidly diminishing value of the combined company. Time Warner even dropped AOL from its corporate name.

AOL once defined the Web for millions of people. But much of its original revenue came from providing dial-up access, a business that peaked for AOL in 2002 at 26.7 million subscribers, back when AOL commonly stuffed free trial CDs in magazines and mailboxes. The march of broadband ate away at that business, and AOL had just 6.3 million dial-up subscribers at the end of the last quarter.

AOL responded to the trend by giving away most of its services, like e-mail, to drive traffic to its free, ad-supported Web sites. It also laid off thousands of employees to try to streamline. But after a few strong quarters, ad growth slowed and then began declining.

[geminispyder-2009]

When the Time Warner/AOL merger happened back in 2001, anyone with half a brain and basic knowledge of the ISP market knew that this was a historically stupid move. AOL bought Time Warner when AOL was still dependent on dialup and other ISPs were moving to or already providing broadband; they should've spent that money on upgrading their networks and training the customer service reps that the people they served were actual human beings and not cash cows to be retained when they wanted to cancel their account.

[whitemale08]

Another example of Wall Street/City of London used a fictitous company like AOL to merge with a media company turned hedge fund, all falling apart.

This is what happens when you merge more puff in a cream puff.

Nobody in the real economy benifited, investement in mankinds progress as a society didn't happen, only the lining of the pockets on Wall Street/City of London.

In fact did you know that part of the Bush/Paulson/Obama/Geitner bailouts include billions of worthless credit-default swaps that were created out of this merger?

Yea, that's right, and guess who gets to benefit again from the demise of the merger?

The same crooks like Goldman Sucks and JP Morgan.

Don't you just love leeches like Goldman Sucks and JP Morgan?

[afmcalax]

It is another example of a worthless merger. The only guarantee is that Wall Street brokers got rich off the merger fees. AOL management got rich from golden parachutes, and Time Warner executives got rich by giving themselves totally unjustified bonuses for merging the two companies. Society got nothing, the employees got nothing. Typical Wall Street deal.

[I_am_me1953]

AOL, what a waste. Had it for about 3 months and quit.

Even the free CDs couldn't get me to try them again.

[WayAround]

"AOL bought Time Warner in 2001"

...and in 2002, AOL was among the many companies engaged in accounting scandals.

[See http://en.wikipedia.org/wiki/Accounting_scandals]

[rational_1]

I'll bet Barry is just itching for another bailout! Are you an obsolete company with a product no one wants? Are you hemorrhaging money at a phenomenal clip? Don't worry, help is on the way. The wealth-spreader cometh. And why not AOL? Lots of precedents and there will be job losses when (not if) they fold since this new spun-put company just has the stink of death on it.