Thursday, May 28, 2009

AOL and Time Warner: No Longer Together

It was perhaps the merger that created the biggest media buzz of last century or this century (depending on which way you think about the year 2000). The confirmation has come and it will take another few months for the demerger to complete.

I think that it will be good for both the companies to part way. AOL can become an independent company and would perhaps go to stock exchange and raise some capital and focus itself as a Internet based company. On the other hand, Time Warner will continue its business of big TV channels like CNN, film making activities, and printing magazines.

Now, it is perhaps the clear that this match was not made in heaven and it created a lot of problems in the last few years. In fact, they sold a number of small companies to competitors as they could not make profit. I still remember that before merger there was WCW wrestling and in 2001, it was sold to WWF for just $7 million.

So, it will be interesting for us to note what happens next to AOL. I guess that Time Warner will not suffer from this separation. AOL will face itself in to a challenging position because the Internet market is very crowded. However, it may be a blessing in disguise for AOL because then its decision makers will enjoy more freedom and would be able to actively scout for buying up start up companies that can become profitable in future.

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