Time Warner 1

 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%

 At

time of merger, value (“market cap”) of AOL/Time Warner was $280 Billion

 Compare

this Market Cap to some of the biggest companies today:      

$290 $145 $123 $113 $432 $375

B B B B B B

- Microsoft – Google – Intel – Hewlett Packard – Exxon (largest in world) – 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  May

eliminated “AOL” from its name

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