In the months from the time when the merger was declared we have seen our telecommunications industry altered. Global consolidation and entry of foreign competitors into U. Vivendi and Terra Networks are by now vigorously involved in American telecommunications and Deutsche Telecom and Nippon Telephone and Telegraph on their way; we require being certain that our authoritarian polices do not put American companies at a viable inconvenience in the global marketplace.
The merger captured the imagination of the public. Investors saw its potential for the significant future earnings growth based on its implementation of technology.
Meanwhile, Time Warner TWX was a leader of old-line media, owning publishing, television, cable, movie, and other entertainment properties. The Internet industry underwent rapid transformation in the s. In the early part of the decade, it was seen as a kind of virtual library.
The Internet would be the means to exchange tremendous amounts of academic information easily. The introduction of Netscape Navigator in made the Internet more accessible to the masses. Many analysts believe the AOL Time Warner merger is the sign that multimedia entertainment will be the next major step for the Internet and a precursor to combining more old and new economy industries.
For all the promise of the Internet as a source of multimedia entertainment many challenges have to be overcome. Although some believe that internet sources eventually will replace print media, many find it cumbersome to read from a computer screen for long time period.
Television on demand where consumers pay to watch programming of their own choosing has long been a dream for media companies, but so far it never has been implemented effectively.
The movie and music industries have experienced challenges from the Internet in the form of piracy. In particular, some consumers are finding it easier to download their favorite songs from the Internet than to purchase CDs.
However, virtually all these multimedia activities are eased by faster Internet connections, sparking the conversion to broadband. The reasons for AOL Timer Warner merger reflect the challenges that both companies face in the changing business environment.
AOL was a content distributor. In order to continue profits growth, AOL had to pursue increased advertising and e-commerce. It needed unique content and services to distinguish itself from its competitors.
AOL currently relies on dialup modems using regular telephone lines. The speed restrictions are bottleneck for multimedia content delivery.
Once it became the future of the ISP industry. AOL became the most vocal supporter of government intervention to force cable firms to open their cables to outside ISPs. Uncertainly concerning the future of open access was a motivation for AOL to acquire its own cable system.
TWX was content producer and a broadband content distributor. Any opportunity for higher growth would require developing a successful Internet business.
So far, it had no clear Internet strategy and had been frustrated by its inability to exploit its cable and media assets more effectively in the Internet.
Its Pathfinder site was fiasco.
Its broadband distribution over cable lines through its partial ownership of the Internet provider Road Runner had not grown as rapidly as was hoped. The premier Internet Distribution Company in the world will be paired with the leading owner of copyrights in the world.A merger between America Online (AOL) and Time Warner (TWX) was announced on January 10, A new company named AOL Time Warner Incorporated was planned outcome of the merger.
AOL shareholders would receive 1 new share for each AOL share, and TWX shareholders would receive new shares for each TWX share. AOL Time Warner (now named Time Warner Inc.) was created through a merger of America Online, Inc. and Time Warner Inc.
(now named Historic TW Inc.), which closed on January 11, America Online became a publicly traded company on the NASDAQ on March 19, , at an original price of $ US regulators have voted to approve the merger between America Online and Time Warner, nearly a year after they announced what was then the biggest merger in corporate history.
America's five-member Federal Trade Commission (FTC) voted unanimously in favour of the merger. The merger agreement between AOL and TWX called for the issuance of a new stock, to be named AOL Time Warner. For each share held of AOL, shareholders were to receive one share of AOL Time Warner.
For each share held of TWX, investors in that stock would receive shares of .
America Online is acquiring Time Warner, the parent of this network, in a deal the two are calling a merger of equals. The deal is the biggest in history, valuing Time Warner at .
Time Warner was the product of the uncomfortable merger between Time Inc and Warner Communications, which brought together film production, TV, music and publishing benefit.
Ted Turner’s media domain (including CNN) was obtained by Time Warner in