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AOL - Time Warner Merger

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by

Friederike Bosse

on 27 October 2014

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Transcript of AOL - Time Warner Merger

merger of AOL and Time Warner
Project Deliverables
Intention
Project Objectives
Provide the customer with every possible media (Internet, TV, magazine etc.)
Project Description
Scope
AOL - Time Warner Merger
AOL - America Online
Founded in 1985 by Steven Case & Jim Kinsey
1992 went public to NASDAQ
mass media corporation and internet service provider
content and services via dial-up modems
Time Warner
established in 1989 after merger between Time and Warner brothers
music production, cable television and magazines
1996 world second largest cable television network
Motives to merge
AOL
Increased competition of and
lacked resources to enhance competitiveness
no broadband
Time Warner
entering fast-growing market of the Internet
use cable television network for creation of broadband internet
Stakeholder
Financial Risk
over valuation of AOL
Risk
Time
Quality
Cost
Shareholders
do not trust the merger
Management
uncertainty
more profit after merger
Customers
Improvement of multimedia supply
Employees
more career opportunities
"Create the world's first global fully integrated media and communications company for the internet century"
Project Justification
wider range of users
most advanced Fiber Optics and Digital Technology networks
actual outcome
become one company
provide to customers all sources of media with a stable broadband network
lowest stock price in history
cancellation of merger
1999
2001
2002
2007
2009
October
rumors of merger
AOL booked $400 million of their income improperly
January
September
merger announced
Dot-com bubble
Loss of $99 billion
January
Stock value went down
From $226 to $20 billion
several lawsuits failed against AOL - Time Warner
Managers of AOL liquified personal shares --> used corporate money to repurchase stock
AOL - Time Warner got split into original companies
December
AOL
Time Warner
Before Merger
Announcement Merger
End of Merger
Now
$73.76
$64.75
$71.88
$90.06
$23.60
$19.10
$39.04
$60.06
Rate of Satisfaction
not sufficient
involvement
of Management
non-existent
Advantages after merger
no effort to reach the state of
total synergy
of both companies
lack of
compatibility
of both company systems
no obvious improvement for customers
no financial incentive to pursue the merger
Failure to combine old and new media
Integration Risk
combining two completely different organizational structures
Technology Risk
content in English and only American preferences
Uncertainty of shareholders
lack of motivation
Thank you for your attention!
AOL - Time Warner Merger
External Risk
no consideration of Internet bubble burst
less hits on online information
services
America´s economy at bottom
user value too low
Full transcript