AOL Time Warner Was A Mistake.
April 2, 2002 6:47 AM Subscribe
AOL Time Warner Was A Mistake. The stock price is in the toilet (relatively speaking), and analysts are proclaiming the Biggest Merger Ever to be a thundering dud. Are huge mergers like this unsustainable?
It wasn't a mistake for Steve Case and AOL. Three months after the AOL Time Warner merger, the dot-com bust began. I don't know if AOL saw the bust coming, but it was either genius or incredible luck for them to make the deal when AOL was at its highest point in stock value.
Considering the amount of trouble AOL was in back in 1995-96, and the competition it faced from the Web and ISPs, the company's position today is amazing. AOL's fortunes would be pretty bleak today without Time Warner around.
posted by rcade at 7:08 AM on April 2, 2002
Considering the amount of trouble AOL was in back in 1995-96, and the competition it faced from the Web and ISPs, the company's position today is amazing. AOL's fortunes would be pretty bleak today without Time Warner around.
posted by rcade at 7:08 AM on April 2, 2002
You gotta hand it to Steve Case, though. He bought Warner when AOL's stock was still riding high, unlike the other dotcom flameouts. Still, I always thought that the merger was stupid -- the whole "synergy" thing was absurd on its face. I feel bad for the old-time Warner shareholders, though; they really got it in the shorts. (What else is new?)
posted by mrmanley at 7:09 AM on April 2, 2002
posted by mrmanley at 7:09 AM on April 2, 2002
Yup. A massive wealth transfer from Time Warner shareholders to AOL shareholders. The latter got about 55% of the combined company's shares ... while the former AOL businesses contribute a small percentage of the net revenues of the combined AOL Time Warner shareholders.
What's ironic is that former Time Warner execs have completely won the battle for control over the company; the old AOL directors didn't stay loyal to Case's team.
posted by MattD at 7:20 AM on April 2, 2002
What's ironic is that former Time Warner execs have completely won the battle for control over the company; the old AOL directors didn't stay loyal to Case's team.
posted by MattD at 7:20 AM on April 2, 2002
Let's not forget the disastrous Metafilter/Kuro5hin merger. That lasted, what, a day at the most?!?
oh... nevermind
posted by jazon at 7:23 AM on April 2, 2002
oh... nevermind
posted by jazon at 7:23 AM on April 2, 2002
I still think there is a lot of synergy between AOL and Time Warner. AOL subscriptions are up as a result of promotion in Time Warner vehicles (last time I checked), Time Warner subscriptions are up as a result of promotion in AOL channels.
A lot of their revenues are incestuously being passed back and forth Enron style which I'd rather not see, but now the costs of marketing are largely internalized instead of externalized. I'm not sure that's entirely bad. If you're going to advertise, you may as well do it for 85 cents on the dollar (number pulled out of air). Also, as more and more media consolidates itself into a few companies, if you own one of them, it's pretty hard not to have most of your media sales centralized within yourself.
The stock price reflects the market. The market doesn't like the merger. The market never liked it. The market at the time of the deal wasn't interested in real companies. They were interested in highly speculative companies. AOL's price was artificially high at the time of the merger. It leveraged that to become a genuine company. The Time Warner old guard taking control of the company is exactly what should have happened. It made a lot of sense. Time Warner got more than they were worth at the time, now the market has soured on new media, and AOL is seen as an anchor around their throats. That will change.
Ultimately, I think the market is going to be shown to be wrong about this.
posted by willnot at 7:47 AM on April 2, 2002
A lot of their revenues are incestuously being passed back and forth Enron style which I'd rather not see, but now the costs of marketing are largely internalized instead of externalized. I'm not sure that's entirely bad. If you're going to advertise, you may as well do it for 85 cents on the dollar (number pulled out of air). Also, as more and more media consolidates itself into a few companies, if you own one of them, it's pretty hard not to have most of your media sales centralized within yourself.
The stock price reflects the market. The market doesn't like the merger. The market never liked it. The market at the time of the deal wasn't interested in real companies. They were interested in highly speculative companies. AOL's price was artificially high at the time of the merger. It leveraged that to become a genuine company. The Time Warner old guard taking control of the company is exactly what should have happened. It made a lot of sense. Time Warner got more than they were worth at the time, now the market has soured on new media, and AOL is seen as an anchor around their throats. That will change.
Ultimately, I think the market is going to be shown to be wrong about this.
posted by willnot at 7:47 AM on April 2, 2002
AOLTW is like a tiger waiting to pounce. With the advertising economy being so slow, yes, it was a mistake. But when it rebounds, watch out - AOLTW stands to gain more than anyone else in the next upward cycle. They're one of the biggest media and media delivery companies out there, and they can use that to leverage almost anything, whether it be political influence or making people go see a movie. Right now they're on their best behavior.
posted by panopticon at 7:49 AM on April 2, 2002
posted by panopticon at 7:49 AM on April 2, 2002
If AOL/Time Warner disappears what will become of the internet??
posted by Settle at 1:49 PM on April 2, 2002
posted by Settle at 1:49 PM on April 2, 2002
My favorite part of the story: When AOL oroginally offered to buy TimeWarner, they offered more than the current combined company is worth.
Doh!
Serves em right. Maybe I'll stop getting those stupid cds now.
posted by jaded at 1:58 PM on April 2, 2002
Doh!
Serves em right. Maybe I'll stop getting those stupid cds now.
posted by jaded at 1:58 PM on April 2, 2002
I keep thinking that some morning, millions of Americans are going to wake up and realize, hey, I don't NEED aol to get on the internet. In fact, I can have a vigorous, fulfilling on-line life without it. Cheap. And on that morning, aol will vanish, like the old Soviet empire (not that they are morally equivalent). Am I nuts to wonder why this doesn't happen?
posted by Faze at 2:05 PM on April 2, 2002
posted by Faze at 2:05 PM on April 2, 2002
...and the internet will be flooded with idiots, curiously lacking the enormous name tag "@aol.com" which was previously seen at the end of their email addresses allowing for easy identification.
THEY WILL BECOME INVISIBLE WARRIORS
posted by Settle at 2:08 PM on April 2, 2002
THEY WILL BECOME INVISIBLE WARRIORS
posted by Settle at 2:08 PM on April 2, 2002
That will never happen, Faze, because millions of Americans do in fact need AOL to get on the Internet, because if they didn't have AOL they'd never manage to get online.
posted by kindall at 2:12 PM on April 2, 2002
posted by kindall at 2:12 PM on April 2, 2002
AOL does a very good job. And there are no significantly cheaper alternatives to the Web. And no one is forcing you to use AOL services. In fact, my Mac has somehow reprogrammed itself to be incapable of opening AOL's browser.
posted by ParisParamus at 2:54 PM on April 2, 2002
posted by ParisParamus at 2:54 PM on April 2, 2002
"figures ParisParamus uses AOL": just confirms what a dick he is...."
posted by ParisParamus at 3:04 PM on April 2, 2002
posted by ParisParamus at 3:04 PM on April 2, 2002
PS: HP's desire to have Compaq is at least 1 quantum stupider than AOL-TW.
posted by ParisParamus at 3:05 PM on April 2, 2002
posted by ParisParamus at 3:05 PM on April 2, 2002
Paris: AOL's $23.90 per month flat-rate pricing is one of the worst deals on the Internet. You should be able to get much better prices elsewhere.
posted by rcade at 3:14 PM on April 2, 2002
posted by rcade at 3:14 PM on April 2, 2002
rcade: show me. They also have a sweet deal on e-mail over the phone and free long distance, so I'm stuck....
But I don't think there are any $10 ISPs out there anymore.
posted by ParisParamus at 3:20 PM on April 2, 2002
But I don't think there are any $10 ISPs out there anymore.
posted by ParisParamus at 3:20 PM on April 2, 2002
anastasiav: not Mac compatible.
posted by ParisParamus at 6:21 PM on April 2, 2002
posted by ParisParamus at 6:21 PM on April 2, 2002
http://www.Dialup-Accounts.com
They resell for major access providers that otherwise aren't interested in selling to individuals. Depending on which of the four wholesalers you choose, you get either absolutely unlimitted hours or hundreds of hours for $11.99/month.
It's nothing but tcp/ip and pop3, so it'll work with any computer than can do standard dial-up (no banners or other client software, just numbers to call).
I use it (true unlimited with Starnet). So does my mom. My connects are consistently 52 or 53.2.
posted by NortonDC at 3:30 AM on April 3, 2002
They resell for major access providers that otherwise aren't interested in selling to individuals. Depending on which of the four wholesalers you choose, you get either absolutely unlimitted hours or hundreds of hours for $11.99/month.
It's nothing but tcp/ip and pop3, so it'll work with any computer than can do standard dial-up (no banners or other client software, just numbers to call).
I use it (true unlimited with Starnet). So does my mom. My connects are consistently 52 or 53.2.
posted by NortonDC at 3:30 AM on April 3, 2002
And I actually had Netzero's paid "unlimited" service. After a month or two they sent me a (snail mail) letter basically saying "You use the internet too much. Go away," and cancelled my subscription.
posted by NortonDC at 8:23 AM on April 3, 2002
posted by NortonDC at 8:23 AM on April 3, 2002
I keep thinking that some morning, millions of Americans are going to wake up and realize, hey, I don't NEED aol to get on the internet.
That's like saying "One day millions of people will wake up & realize, hey, I don't NEED Windows to use my computer," and hoping they will all install Linux. I'm sure most people here have no problem with it, but there is a learning curve associated with using the Internet. As it is now, a large percentage of Internet users actually like AOL, because it provides them an easy way to get to this Internet thing they've been hearing so much about.
posted by zempf at 12:02 PM on April 3, 2002
That's like saying "One day millions of people will wake up & realize, hey, I don't NEED Windows to use my computer," and hoping they will all install Linux. I'm sure most people here have no problem with it, but there is a learning curve associated with using the Internet. As it is now, a large percentage of Internet users actually like AOL, because it provides them an easy way to get to this Internet thing they've been hearing so much about.
posted by zempf at 12:02 PM on April 3, 2002
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...right...
[looks for flipper babies...]
posted by NortonDC at 7:02 AM on April 2, 2002