In January 2003, AOL Time Warner, Inc., announced that it would be posting a loss of $98.7 billion for the year ended December 31, 2002, the largest corporate loss in U.S. history. While company exec- utives described the loss as a result of accounting changes rather than problems with ongoing opera- tions, the media conglomerate clearly faced significant challenges. The stock price closed the month of January at $11.66, down from $71 in January 2000, when it announced its merger with America Online (AOL).
The gravity of the events of the past few years hit TJ like a hammer. TJ was coming down from the high she felt when the CEO called last week to promote her to a new position within Time …show more content…
Subsequent to the AOL merger, Time Warner, Inc., is the largest media company in the world, with revenues in excess of $38 billion. However, Disney, Viacom, News Corp., and Sony are all huge media competitors, with various assets in the televi- sion, publishing, music, Internet, and film markets. (See Exhibit 2 for an overview of selected competitors in the media industry.) In 2004, General Electric agreed to merge its NBC property with Universal, owned by French firm Vivendi, to create NBC Universal. The new entity is 80 percent owned by GE and 20 percent owned by Vivendi. Currently there is speculation that Sony is attempting to acquire MGM.
Media consolidation is expected to continue due to recent revisions of media own- ership restrictions by the Federal Communications Commission (FCC). In 2003, the FCC relaxed several regulations that restricted the number of media outlets a company could own in any local market and increased the national audience that any one com- pany can reach. Media ownership regulations are designed to prevent any one com- pany from controlling too much of the media; they represent an effort to ensure some level of diversity in the media. Proponents of the stricter media regulations fear that increased concentration will lead to greater homogeneity in media content and will be a disservice to consumers. Those favoring relaxing the guidelines argue that the fast