In January 2000, AOL and Time Warner announced their intent to merge, and the merger was completed a year later. The merger was the largest in U.S. corporate history, with AOL’s preannouncement value at $163 billion, and Time Warner’s preannouncement value of $100 billion. However, by the time the merger was com- pleted, the value of the combined firm had dropped to $165 billion. Both companies hoped that the combination of Time Warner’s content and AOL’s Internet base would provide increased opportunities for the merged company to grow. Many ideas were presented to show how AOL and Time Warner would be able to combine their Internet and media operations to enhance the value of the combined …show more content…
Cooperation between the AOL and Time Warner divisions was nonexistent, and adver- tising deals were lost due to internal conflicts. The decline in the value of technology stocks and a sluggish economy forced AOL Time Warner to take a $98.7 billion loss in 2002, primarily due to the write-down of the value of AOL. Gerald Levin, the chairman and CEO of Time Warner prior to the merger, stepped down as the CEO of AOL Time Warner in 2002. Steve Case, former chairman and CEO of AOL, resigned as chairman of AOL Time Warner in early 2003. Richard Parsons was promoted from COO of the Time Warner side to the position of CEO of the firm. Parsons, who was also appointed chairman of the board when Case resigned, promoted several senior Time Warner exec- utives and accepted the resignations of some of the top AOL …show more content…
AOL became the pioneer of mass-marketing Internet services by dis- tributing millions of disks with its software and offering free minutes to new users. By the end of 1995, AOL had almost 5 million members and had launched AOL Europe in partnership with Bertelsmann AG, a German media conglomerate. In 1996, AOL began charging a flat rate for its service, which increased its popular- ity greatly but also resulted in busy signals and network congestion. Also that year, AOL launched its AOL Canada subsidiary and, through a joint venture, expanded to Japan. Rapid growth in subscribers continued through the end of the 1990s, and AOL had over 20 million members by the end of 2000. By 2003, it appeared that AOL’s membership had peaked; membership actually declined from 24.7 million