On this day in history, exactly 16 years ago, America Online Inc. declares interest in acquiring Time Warner Inc. for over a billion dollars (182 billion) in stock as well as debt. AOL Time Warner, was the resulting $350 billion entertainment mega-corporation that was highly relevant when it came to news, publishing, media, internet and mostly music.
This day in history marked the use of the internet to market and promote businesses, commonly referred to as the “internet bubble”. AOL could not have come at a better time. The mega-media corporation was to be as a result of combining Time Warner’s movie production prowess among other things, with the 30 million Internet subscribers of AOL. The terms, as cleared by the Federal Trade Commission, stated 55 percent of the ownership went to AOL shareholders, while 45 percent belonged to the Time Warner shareholders. The co-founder and chairman of the two companies became the heads of the newly merged company. AOL’s chairman as well as co-founder, Steve Case, was named chairman, while chairman of Time Warner and also CEO, Gerald Levin became it’s CEO.
The company suffered severe losses when the Internet bubble faded in the year 2001. The agreement to sell content of Time Warner through the AOL network was never put into play. Most blame relating to the ground-breaking losses went to the then CEO, Levin, who announced his resignation in December 2001. He was blamed for allegedly taking part in the grabbing of old-media assets alongside Time Warner. Gerald Levin was later replaced by Richard Parsons, who would later cause a stir among shareholders, thus prompting the immediate resignation of the then Chief Operating Officer Bob Pittman, who garnered more approvals as compared to Parsons.
The year 2002 would be the year AOL Time Warner would report the largest ever quarterly loss – $54 billion – for a U.S. based company. The company dropped ‘AOL’ from its original name following the resignation of Case the following January. Despite being able to rise up from its losses, Time Warner Inc. still reported rather low stock prices. Pressure mounted for the company to be broken into smaller divisions. On acquiring a stake in the company, billionaire Carl Icahn fired threats of breaking it up so as to offer shareholders better value. Time Warner came to a joint conclusion to cut costs and accepting to purchase a part of its own stocks. This led to the unfortunate withdrawal of Icahn from the company.
Time Warner’s president, Jeffrey Bewkes, assumed chairmanship from Parsons in December 2007. He later endeavored to give shape to the world’s biggest media company.
This day in history:
- Hubert Humphrey expressed criticism for President Nixon in 1972.
- Famous outlaw Frank James is born in Missouri in 1843.
- The League of Nations is formed in 1920. The world’s most affordable car is officially launched in India in 2008.
- Loyalists are called upon by then North Carolina governor to war against rebels in 1776.
- Thousands die in an Avalanche in Peru in 1962.
- President Johnson seeks funding for the Vietnam War in 1967.
- Arthur Griffith is unanimously elected president of the Irish Free State in 1922.
- The first meeting of the United Nations takes place in 1946.