The AOL and Time Warner separation of last week is no real news after eight years. But when the merger was announced everyone saw advantages. So did I. In fact I went back into my writing of 2001 and I must say, that I went with the stream and pointed to advantages of the two companies: the content factory and the advertisement hold. When the merger was announced in 2000, I was writing a white paper with Professor Paul Rutten for the Dutch research institute TNO. The white paper was intended to start canvassing publishers for assignments. We saw the movement towards content factories and pointed to this merger, to the Walt Disney and Pixar merger as well as the merger of Telefonica and Van der Ende Entertainment, which has been undone also in the past years.When all the talk about mergers came up, it looked good. The landscape would be rearranged dramatically. AOL was a veteran online consumer company, which would bring along its host of subscribers, while Time Warner was an analogue publisher of radio, television and print, which possessed a large copyright library. Both companies had a lot to offer to each other. In fact it could form its own complete integrated content cycle from market research to content development, multi-platform marketing and distribution. This was expressed in the fabulous merger sum of $147 billion.
But it all turned out differently. AOL lost many of its dial up subscribers to broadband services. It once had 26,7 million subscribers and at the point of separation has 6,3 million subscribers left. Also the process of digitising analogue content has proven to be more difficult than expected. Technically it has not been a problem, but organisationally and marketingwise it has been. Publishing companies are famous for forming islands in an organisation, which are defended for content and copyright. So, exchanging and marketing content for the digital market has never worked in AOL Time Warner.
What is going to become of the demerger of AOL and Time Warner. The press release says “The separation will be another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content businesses. The separation will also provide both companies with greater operational and strategic flexibility. We believe AOL will then have a better opportunity to achieve its full potential as a leading independent Internet company.”
“After the proposed separation is complete, AOL will compete as a standalone company – focused on growing its Web brands and services, which currently reach more than 107 million domestic unique visitors a month, as well as its advertising business, which operates the leading online display network that reaches more than 91% of the domestic online audience. AOL will also continue to operate one of the largest Internet access subscription services in the U.S.”
The press release is very optimistic and of course both parties have to be with an AOL stock market offering in the near future. But to me it sounds like Time Warner is happy to be able to continue like they did before the merger in 2001. In the meantime AOL is depicted as the best online service in the US world, which, of course, it is not. Even Google was glad to get rid of its 5 percent stock holding it had in AOL.
Will the stock market be interested in buying AOL stock? Or would AOL be better off by being bought by a company. Google has excluded itself already by selling the 5 percent interest in shares. Is AOL then prey for Yahoo or even Microsoft? Yahoo could use the company to shape it up and start a world expansion program. And Microsoft could use AOL is a testing service for its new products.
Blog Posting Number: 1350
Tags: content,
content factory
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