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Aol And Time Warner Merger Essay

939 words - 4 pages

Merger MadnessHow can multi-million dollar companies make themselves larger than they already are? Simple, they merge with another giant to make a super giant. Sounds easy, but it doesn't always work out profitable. January 2000 was the month of one of the biggest mergers between two large-scale media companies, America Online and Time Warner. Was a merger the best move for Steve Case of AOL and Gerald Levin of Time Warner? Or will it fail and both super powers will be laid to rest?Before merging with AOL, Time Warner was a powerhouse in itself. It owned such companies as CNN, Turner Broadcasting, Home Box Office (HBO), Time Inc., Time Warner Cable, Warner Brothers, and New Line Cinema. It ...view middle of the document...

was a profitable company and they were considered media giants.America Online, the other half of the merger, was a Internet Service Provider (ISP) giant in itself. Founded in 1985 by Steve Case and Jim Kimsey, Quantum Computer Services, the predecessor to AOL, provides online information and other services via PC modems to consumers. Then in 1989, Quantum Computer Services' changed to America Online and service began. The service offered e-mail, games, discussion forums, and chatrooms. The company exploded, becoming the number one ISP company by 1994, only 5 years after becoming public. AOL expanded its services internationally in 1995, providing service to Europe and Canada. Increasing exponentially each year, AOL reached 27 million subscribers in 2000, averaging a new member every 6 seconds.Both American Online and Time Warner were profitable organizations on their own. At June 30, 2000, America Online had earned $6.484 billion in online revenues for the 4 quarters prior to this date. This ranked them number one above all other online companies, beating out such companies as Charles Schwab & Co.,, E*Trade Group, as well as others. Also, America Online Inc. had a total of 25.1 million users of their online chat and instant messaging by July 24, 2000, nearly 92% of all chat and instant message users. These numbers also suggest that America Online was a very successful company before its merger.After the merger of AOL and Time Warner, the media industry greatly consolidated. AOL, the ISP superior, and Time Warner, a powerhouse in motion pictures; television; music; and journalism, consolidated the media into one company that is...

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