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AOL Time Warner Merger Announced on January 10, 2000, one of the largest and most powerful mergers of the past century took place. The consolidation of America Online and Time Warner ($ 183 billion dollar deal) caused much arguing amongst financial analysts and related parties. There were many issues and questions raised in the regards of the future of the new super corporation. Many doubts were expressed and everyone was eager to know what will it all end up with. Today, having observed the post-merger market for several years the scholars can pronounce the verdict and analyse the problems faced by the company and their resolution steps taken by the management of AOL-Time Warner. One of the most asked questions about the merger at the beginning of the story was rather obvious: What are the possibilities for the two companies after they unite their forces?
The merge combined one of the largest old-economy media companies with the worlds largest new-economy media company to create a company positioned to lead to the second Internet revolution and capitalize on the convergence of entertainment, information, communications and online services. Combined sales of the two companies reached more than 33 billion on average. Top executives at the two companies proved that the merger allowed Time Warner to bring its entertainment brands to consumers in a digital environment, in addition to the traditional formats. Another problem that was expected to become rather stressful soon after the merger was the culture shock. The AOL Time Warner deal represented the joining of the Old Media with the New Media. Not only was it a marriage of different approaches, but also the two CEO's were very diverse individuals.
The two companies were quite different, in nearly every aspect. Some of the divisions of Time Warner have been around since the 1920 's, while the youngster, AOL is a less than twenty years old. The quick paced, new up starting Internet companies never thought in a million years they would ever need the old stand-by media organizations. The analysts were expecting some clash of the interests of the two companies. The world expected some scandalous sensation from the merger. Yet the companies proved they are able to reason critically and find mutual agreement on the strategies they were to apply.
First signs of the trends of the development and market strategies of AOL-Time Warner became visible when the company made a bid to acquire a major part of AT&T cables system. The first talks between the two companies started in July of 2001. Currently AOL Time Warner controls more than a half of the Internet-access market in America. Adding AT&Ts assets to it would allow AOL Time Warner to reach a broader audience. It is in the best interest of the phone company to create as much interest in the company as possible to achieve the highest bid. So far AT&T is not commenting on any of its bids it has received.
But we do know that there are at least four other companies interested in AT&T. The four companies are Cox Communications, Charter Communications, Walt Disney Co. , and Microsoft Corp. But if this merger were to happen it would have control of a third of the U. S.
cable market. That may cause smaller cable companies to merge. If AOL Time Warner gets a part of AT&T it could possibly pose problems to their customers. They would have 27 million customers and one third of the cable market. With AOL Time Warner owning that amount of the business it could knock the smaller companies out of the loop.
When you have competition between many businesses it forces you to keep your prices at a reasonable level. When there is a lack of competition you can charge as much as you want for the good or service that you offer. If there is a lack of competition because of barriers to entry into the market or for a number of other reasons, that is a monopoly. A monopoly is not legal in the United States without express governmental approval. However, AT&T, having realized they are about to catch the biggest fish in the pond is not hassling with selling itself to AOL-Time Warner conglomerate. The latter is interested in this acquisition and will put much of its efforts into this.
There will be many turnarounds in the history of AOL-Time Warner, however the prospects for the performance of the company in upcoming several years are already becoming clear. Needless, to say the two individual companies are now working well together regardless of their difference in the cultures. Part of the companys success is its ability to look at the things from many perspectives. As long as AOL-Time Warner is on the lookout and in search for the new opportunities, they will surely succeed in all of their beginnings.
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Research essay sample on Aol Time Warner Merger
