 CASE STUDY TIME WARNER/AOL

 Vivek Singh
 ID -36922
 Closed Jan. 2001
 Largest Deal in history at this time
 World’s largest ISP and World’s largest
Media Conglomerate
 AOL’s Steve Case became Chairman
 TW’s Gerald Levin became CEO
 Control:
▪ AOL Shareholders: 55%
▪ Time Warner Shareholders: 45%
 Attime of merger, value (“market cap”)
of AOL/Time Warner was $280 Billion

 Compare this Market Cap to some of the

biggest companies today:
 $290 B - Microsoft
 $145 B – Google
 $123 B – Intel
 $113 B – Hewlett Packard
 $432 B – Exxon (largest in world)
 $375 B – GE (2nd largest in world)
 Business Units:
 Time Warner Cable (2nd largest cable co. in US)
 Cable Networks: (e.g. HBO, CNN, TNT, others)
 Filmed Entertainment: (e.g. Warner Bros.)
 Publishing Unit (Largest in World), including
Time, People, Fortune, and others
 Others: including Atlanta Braves, Real Estate
properties.
2001 merger almost precisely coincided with the
burst of the “dot com” bubble.
NASDAQ started its multiyear slide of roughly 80%
Many “dot coms” became “dot gones”
The AOL component of the AOL/Time Warner
entity also dropped in value.
In 2002, AOL/Time Warner lost $100 Billion due to
impairment of assets and other expenses related
to the AOL component of the company. This was
the largest corporate loss in history at the time.
However, Cash Flow from Operations was $7
Billion!
 May 2002: Richard Parsons elected to CEO

 Company eliminated “AOL” from its name

 May 2003: Steve Case removed from Chairman of

Board. Richard Parsons elected to Chairman of
the Board and CEO.
 Industry: Media Congolomerates
 Sales: $45 Billion
 Mkt Cap: $86 Billion
 Employees: >80,000