Abstract

The case discusses the problems faced by Time Warner after the merger with AOL in the year 2001. The merger created the largest media company in the world. However, with the Internet bubble bust, several dotcom companies went bankrupt which adversely affected AOL's advertising revenues. Moreover, the number of dial-up subscribers was also constantly going down which affected the overall revenues and profitability of AOL. The case explains the strategies adopted by Richard Parsons, the CEO and Chairman of Time Warner and Joe Miller, the CEO of AOL, to turnaround AOL. One of these strategies was to provide free content on its portal which helped AOL attract more online visitors thus increasing its advertising revenues. AOL's success led Google, the leading search engine in the world, to enter into a global advertising partnership with the company and acquire a 5% equity stake in AOL for US$ 1 billion.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Turnaround strategy of AOL
• Synergies in the merger between traditional and online media company.

Keywords

AOL, Time Warner, Corporate Turnarounds, Richard Parsons, Merger Integration, Failed Merger, Merged Synergies, Reorganization, Accounting Irregularities, Subscriber Base, Superstore on the Web, Online Advertising, Web Television, Content Partnerships