On This Day

aol time warner merger, aol time warner case levin, aol time warner ceo, aol time warner press conference
Stuart Ramson/AP
AOL CEO Steve Case and Time Warner CEO Gerald Levin shake hands, Jan. 10, 2000.

On This Day: America Online Buys Time Warner

January 10, 2011 06:00 AM
by findingDulcinea Staff
On Jan. 10, 2000, Internet service provider AOL bought the media and communications conglomerate Time Warner in the largest merger in history. The new company was originally valued at $350 billion, but it soon lost money.

AOL and Time Warner Merge

facebook
By 2000, America Online had established itself as one of the world’s leading Internet service providers, boasting roughly 22 million customers in the United States and abroad. In January 2000, it announced plans to take over Time Warner in a deal worth roughly $182 billion in stock and debt.

The deal saw AOL take over media giants such as Time, People, Fortune, Warner Entertainment, HBO, New Line Cinema, and CNN.

CNN Money, one of the companies directly affected by the merger, wrote that the new company “will boast unrivaled assets among other media and online companies” and described the deal as a “stunning development validates the Internet’s role as a leader in the new world economy.”

The Federal Trade Commission approved the deal 5-to-0 in December 2000 after what CNN Money described as “unprecedented concessions” aimed at protecting competition in the high-speed Internet access business.

Concerns Over the Merger

Salon.com examined whether the deal might spell trouble for new-media companies. The consensus seemed to be that the anxiety was somewhat misplaced. 

As an already massive media conglomerate, many people questioned what Time Warner would gain through merging with AOL. When asked this in an interview, Bruce Leichtman, director of media and entertainment strategies at the Yankee group, responded, “the torch has been passed to a new generation, and the new generation is the Internet. And that's where the opportunity lies in increased revenue beyond the 10 to 15% that Time Warner is currently making.”

The Ted Turner Factor

In December 2001, outspoken American media mogul Ted Turner openly criticized the leadership of AOL Time Warner CEO Gerald M. Levin and said selling his CNN broadcasting empire to Time Warner was one of his biggest regrets. “I could have fired Levin before he fired me,” he told The New York Times.

In January 2003, Turner announced that he would resign as vice chairman of Time Warner later that year. The decision came just after the company declared a $98.7 billion loss for 2002.

In 2004, Turner explained his regret at selling his interests to Time Warner to Washington Monthly. “Today, media companies are more concentrated than at any time over the past 40 years, thanks to a continual loosening of ownership rules by Washington,” Turner told the magazine.

Reference: Time Warner

facebook

Most Recent Beyond The Headlines