Turner built Turner Broadcasting into a cable powerhouse from his first move into broadcasting with the purchase of an abysmal UHF TV station in Atlanta. Channel 17 received the call letters WTCG for Turner Communication Group. The call letters later became WTBS for Turner Broadcasting System. Today, it's just TBS and exists predominantly as an ad supported basic cable channel that has spawned the growth of other cable programming services. Turner sold his company to Time Warner, primarily a cable television company and magazine publisher. Eventually, Ted Turner would lose about 80% of her personal fortune in the collapse of AOL/TW, about $8 BILLION.
Read this article in The New York Times about the merger, 10 years later:
http://www.nytimes.com/2010/01/11/business/media/11merger.html?pagewanted=1&sq=aol%20&st=cse&scp=2
Here's a shorter URL: http://bit.ly/6djKT3
Where and why did this go wrong?
Here are the opening paragraphs from the NYT story:
A decade ago, America Online merged with Time Warner in a deal valued at a stunning $350 billion. It was then, and is now, the largest merger in American business history.
The Internet, it was believed, was soon to vaporize mainstream media business models on the spot. America Online’s frothy stock price made it worth twice as much as Time Warner’s with less than half the cash flow.
4 comments:
It's funny now to look at the "what ifs" of the story.
"What if AOL had purchased eBay or EA?"
"What if Time Warner had merged with Yahoo instead of AOL?"
"What if both of these companies had listened to their financial advisers' warnings of the merger's lack of business solidity?"
In the end the merger serves as something to learn from in what I think Nina Munk's book title describes perfectly - "Fools Rush In."
AOL was misleading with it's ad revenue? I think that the cable modem might have had something to do with it's earnings, also. In it's prime, AOL was also charging a good amount for dial-up internet access; but now it only gets that revenue from rural areas without broadband.
When people are able to circumvent AOL and access the web by using Internet Explorer, the need for their product (internet access) declines. Along with the decline in revenue, they had less people to sell to advertisers.
I think it is a bad idea to have only a few people involved in making such a large decision like that between two companies of such magnitude. There is too much at risk for too many people.
CNN's ratings are in the toilet now too and Turner is wanting to go back. If he returns, I hope he is a better producer/station manager than he was at media merging.
I do think that it is very interesting how people become incredibly reliable on technology but maybe for the same reasons children love candy. Do people simply want what seems new and unreachable? or do people like to push limits to which technology has seemed to push. With the internet so rapidly advancing I think that it has become a huge powerhouse that people might have too much trust in. Maybe it is a good idea to have AOL become advanced but this leaves other forms of communication and forms of media out which might leave people thinking bias. I know that I like to see certain articles from many points of view so it might be a good advancement but should not replace other forms of media.
kathleen said...
I do think that it is very interesting how people become incredibly reliable on technology but maybe for the same reasons children love candy. Do people simply want what seems new and unreachable? or do people like to push limits to which technology has seemed to push. With the internet so rapidly advancing I think that it has become a huge powerhouse that people might have too much trust in. Maybe it is a good idea to have AOL become advanced but this leaves other forms of communication and forms of media out which might leave people thinking bias. I know that I like to see certain articles from many points of view so it might be a good advancement but should not replace other forms of media.
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