The Turnaround of AOL

In January 2000, AOL announced its merger with Time Warner, creating the largest media company in the world.⁵ The stock of the two companies was converted into the stock of the merged entity - AOL Time Warner. AOL shareholders received one share of the combined entity for each share of AOL held by them while the Time Warner shareholders received 1.5 shares of AOL Time Warner for each share held by them. While announcing the merger, Time Warner declared that, "The merger will combine Time Warner's vast array of world-class media, entertainment and news brands and its technologically advanced broadband delivery systems with America Online's extensive Internet franchises, technology and infrastructure, including the world's premier consumer online brands, the largest community in cyberspace, and unmatched e-commerce capabilities.

The relatively younger AOL took over Time Warner and controlled 55% of the new company's stock. Some analysts believed that the deal was a merger of equals which for tax and accounting purposes was structured as an acquisition of Time Warner by AOL. The sixteen member board of the new company had directors from both Time Warner and AOL. The company had two chief operating officers - Parsons and Robert W Pittman (Pittman). Gerald M Levin (Levin) was the CEO and Steve Case (Case) was the Chairman. The merger made sense to both the companies as Time Warner was looking at acquiring Internet presence. It was looking at entering the Internet arena, after it failed with its internet initiatives - Pathfinder and Entertainment.com⁷...