Case Analysis 11 AOL Time Warner, Inc.: A Bad Idea from the Start?

* Time Warner is the result of a merger of two companies (Time Inc. & Warner Brothers). Both companies * * grew to become industry leaders in media and entertainment. Time Inc. launched various magazines and * * acquired a publishing house. Warner studios released the first talking movie and created Warner Bros. * * Warner studio became a cable industry. Time Warner further expanded its market potential in its industry * * and merged with AOL, an industry leader in online information and other broadband services. AOL purchase * * of brands such as CompuServe and MapQuest along with other brands, was its acquisition strategy. After the * * merger in Jan. 2001 the company became known as AOL Time Warner. AOL offered stock value of $110 for * each Time Warner share that was selling at $64.75 in the market. AOL Time Warner marketing concept was to * combine new and old media to strengthen total position in the market. AOL Time Warner revenues increased * by 78.7% in 2002. Operating income and net income decrease. Net loss was $98.69 billion compared to a loss * of $4.93 in 2001. And a profit of $1.12 in 2000. By 2003 the potential of the merger failed to be seen due to * economic, financial times, internal management and cultural clashes. * * I. Internal Scanning * A. Strengths 1. AOLTW held the unique status of being the only one-stop broadband-providing the service of cable, media and internet services 2. Capital Resources-AOL assumed Time Warner’s debt * B. Weaknesses * 1. Management-lack of strategic leadership, change in management and discord among those that remained * 2. Profitability Ratios-net profit margin/-13.27% in 2001 and fell to -240.95% in