There is a surge of mergers and acquisitions among television networks, entertainment, and internet-related companies since 2010. Some have been completed, some have been stopped by regulators, and others are still in progress. How are these different from the AOL-Time Warner merger of the year 2000? Are the recent mergers and acquisitions likely to be successful? Why or why not? Solution 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. After gaining Federal Trade Commission approval, the deal had its skeptics. AOL was the majority shareholder, and for the financials to add up, AOL would have to continue making bundles of money in advertising revenue. Before the ink was even dry on the deal, the dot-com bubble had burst, Internet stocks plummeted, and the bottom fell out of the online advertising market. To make matters worse, increased availability of high-speed Internet access cut deeply into AOL\'s dial-up revenue The merger proved poisonous for both companies and downright deadly for investors. About $100 billion in stock value was wiped out . In 2009, Time Warner spun AOL off as its own company. Today, the AOL-Time Warner marriage is the standard business school case study for the worst merger ever. It was an odd merger, where both companies retained their independence. In fact, Time Warner appears to have retained more power than AOL, even though technically, AOL bought Time Warner. There was a great potential to a merger - just imagine having the largest ISP (dial-up) with millions of internet accounts merging with one of the largest cable network providers with millions of homes connected to coaxial and then fiber networks. Yet, they could not make it work. The rumor has it that the executives of both companies after the merger (yet, again - they were never one company) went to negotiate their consumer offering, specifically, AOL over Time Warner boradband network. Nobody wanted to give up any revenue. The outcome? If you want AOL over broadband, you can pay the current price for Time Warner internet (around $45/mo back then) plus the standard AOL fee (around $20/mo). Needless to say, it was not a popular offer. AOL slowly died. Time Warner spun it off. NOW A days mergers and acquistions are going smoothly Here’s a list of examples of good mergers and acquisitions transactions: Human factors almost always have a significant impact on both a deal’s success and the amount of additional cost and effort required to recover when they were not sufficiently considered. The five human factors below differentiate successful deals: Managing human factors increases the likelihood of value being realized: people are complicated, and building a team that has the capacity and inclination to attend to them is a differentiator in an industry where many still focus on the technical elements of the deal..

1. There is a surge of mergers and acquisitions among television networks, entertainment, and
internet-related companies since 2010. Some have been completed, some have been stopped by
regulators, and others are still in progress. How are these different from the AOL-Time Warner
merger of the year 2000? Are the recent mergers and acquisitions likely to be successful? Why or
why not?
Solution
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.
After gaining Federal Trade Commission approval, the deal had its skeptics. AOL was the
majority shareholder, and for the financials to add up, AOL would have to continue making
bundles of money in advertising revenue. Before the ink was even dry on the deal, the dot-com
bubble had burst, Internet stocks plummeted, and the bottom fell out of the online advertising
market. To make matters worse, increased availability of high-speed Internet access cut deeply
into AOL's dial-up revenue
The merger proved poisonous for both companies and downright deadly for investors. About
$100 billion in stock value was wiped out . In 2009, Time Warner spun AOL off as its own
company. Today, the AOL-Time Warner marriage is the standard business school case study for
the worst merger ever.
It was an odd merger, where both companies retained their independence. In fact, Time Warner
appears to have retained more power than AOL, even though technically, AOL bought Time
Warner.
There was a great potential to a merger - just imagine having the largest ISP (dial-up) with
millions of internet accounts merging with one of the largest cable network providers with
millions of homes connected to coaxial and then fiber networks. Yet, they could not make it
work.
The rumor has it that the executives of both companies after the merger (yet, again - they were
never one company) went to negotiate their consumer offering, specifically, AOL over Time
Warner boradband network. Nobody wanted to give up any revenue. The outcome? If you want
AOL over broadband, you can pay the current price for Time Warner internet (around $45/mo
back then) plus the standard AOL fee (around $20/mo). Needless to say, it was not a popular
offer. AOL slowly died. Time Warner spun it off.

2. NOW A days mergers and acquistions are going smoothly
Here’s a list of examples of good mergers and acquisitions transactions:
Human factors almost always have a significant impact on both a deal’s success and the amount
of additional cost and effort required to recover when they were not sufficiently considered. The
five human factors below differentiate successful deals:
Managing human factors increases the likelihood of value being realized: people are
complicated, and building a team that has the capacity and inclination to attend to them is a
differentiator in an industry where many still focus on the technical elements of the deal.