write a 3page case study paper on following topic :- in january 2003 AOL Time Wa
ID: 409071 • Letter: W
Question
write a 3page case study paper on following topic :-
in january 2003 AOL Time Warner INC.,announced that it would be posting a loss of $98.7 Billion for the year ended december 31, 2002, The largest corporate loss in U.S history. While company executives describe the loss as a result of accounting change rather than problems with on going operations the media conglomerate clearly faced significant challenges. the stock price closed the month of january at $11.66, down from $71 in January 2000, when it announced its merge with america online(AOL).
the gravity of the events of the past few years hit TJ like a hammer. TJ was coming down from the high she left when CEO called last week to promote her to a new position within time warner-effective today, september 1, 2004 TJ set aside her morning coffee and the wall street journal to review the company's oprations before replying to the first memo in her inbox.
Explanation / Answer
The AOL Time Warner merger was a failure. The merger took place in 2001 and there was a lack of synergy which spelled doom for this corporate marriage. AOL provided services like GUI chat as well as interactive online gaming. It offered online portals, messangers, online gaming and video streaming.
The culture at AOL was one being driven by innovation. Employees were encouraged to take risks.
Time Warner is a media company with magazines, cable broadcasting, studios as its offerings. The culture at Time Warner was completely different from the culture of AOL's. Time Warner had a traditional and a refined culture.
The aim of the merger was purely from a financial point of view - to create a behemoth media and communications company. However, the merger was a failure mainly due to lack of synergy. This was caused by the differences in the culture of the two companies. Secondly, the business model of AOL was different from Time Warner's. The former's business model needs resources in terms of money and time to grow. This resulted in concerns among the managers of both companies regarding the usefulness of the merger. The merger also failed as the structure of the management team was baised in AOL's favor and this caused conflict among Time Warner's employees.
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