What is good for Time Warner (TWX)
is not good for America Online Inc. (AOL).
As everyone knows, AOL and Time Warner decided to merge yesterday. The
new combined AOL will have a market capitalization of a staggering $350
billion. It's the biggest merger in corporate history.
disinformation | aol and the culturati:: The size of AOL/Time Warner in itself wont change the opportunities for alternative viewpoints. AOL and Time Warner are both entertainment companies. http://www.disinfo.com/archive/pages/article/id501/pg1/HOME |
Shareholders of Time Warner loved the deal. The stock soared 25-5/16 to
90-1/16. The Net efforts of Time Warner have been spotty, such as with the
disaster with Pathfinder.com. Although, as of late, the company has done
much better. Examples: CNN.com, CNNfn.com, CNNSI.com, etc. However, by
joining forces, crusty Time Warner has now entered the wired world.
BBC NEWS | Business | Analysis: AOLs tough challenges:: Media giant AOL Time Warner has posted the largest annual loss in US What about calling it Time Warner? On Wall Street, this once had a nice ring to it. http://news.bbc.co.uk/2/hi/business/2708965.stmHOME | Time Warner - Salon.com:: What does Steve Cases choice of wine reveal about the AOL-Time Warner deal? AOL and Time Warners marriage of insecurity http://dir.salon.com/topics/time_warner/HOME |
As for stock AOL? Well, shareholders were not impressed. The stock fell
1-7/8 to 71-7/8. And there is good reason for AOL shareholders to be
disappointed.
Ann Kellan: What does the AOL Time Warner Merger mean for consumers?:: Ann Kellan: What does the AOL Time Warner Merger mean for consumers? January 11, 2000 to see, an integration of AOL with Time Warner with the cross-promotion of http://www.cnn.com/COMMUNITY/transcripts/2001/01/11/kellan/HOME | Whats next for AOL at Time Warner? - BloggingStocks:: Whats next for AOL at Time Warner? Posted Aug 2nd 2007 2:42PM by Jon Ogg Spinning off part of AOL would give Time Warner a non-cash currency to make http://www.bloggingstocks.com/2007/08/02/whats-next-for-aol-at-time-warnerHOME |
First of all, one bad sign is the new name of the company: AOL Time
Warner. Why not just call it, simply enough, AOL? Well, I'm sure there
were many huge egos involved in the decision.
Just imagine the meetings with such a cast of characters as Steve Case,
Gerald Levin (chief executive officer of Time Warner), Ted Turner, Bob Pittman (AOL's chief
operating officer) and so on.
If anything, the new name really means that there will be much confusion
about the value of the new company. Is it a new media company? Is it a
traditional publisher, movie studio and cable company? What is it really?
Next, there are likely to be many cultural issues. These are different
organizations and may not integrate very well.
True, there are definitely strong synergies. Time Warner has marquee
content -- movies, music, magazines, etc. -- that can be integrated into AOL.
There can also be cross-promotions among these properties.
What's more, the AOL-Time Warner deal will likely incite other similar
mergers. It may, in fact, get crazy. One idea: Yahoo! purchasing Disney
or Viacom.
However, I think the merger means that the long-term growth prospects of
AOL have slowed. It is not a fast-charging New media company.
It is a hybrid. AOL will now be hit with brick-and-mortar dilution.
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