Time Warner splits AOL3500 billion-dollar marriage break-up

After merging with Time Warner, AOL has been in a non-stop struggle, betting ads, ignoring the consumer business, making its fine assets continue to depreciate, "eventually reduced to holding the golden begging to eat." Article | Hu Yilin Source | The July issue of the Journal of Excellence is the world's traditional media giant, one of the world's leading ISPs (Internet Access Service providers), Time Warner and AOL (A O L) of this has been seen as the new and old media "a perfect match" of the marriage, after living together for 8 years, finally with helpless　　"Break up." May 28, 2009, Time Warner announced that the Board has authorized management to carry out the AOL plan. According to foreign media reports, the break-up will be completed by the end of this year.　　After the break-up, AOL will become an independent-listed internet company focused on developing its advertising business, but still one of the largest in the United States, while Time Warner is focused on content.　　2001, the establishment of only 15 years of AOL announced with the more than 70-year history of the world's largest media group Time Warner merged, the two sides to form a "AOL-Time Warner Company" to provide a wide range of information, entertainment and communications services. The two sides combined turnover of $166 billion trillion. After the merger, the new company became the world's seventh-largest company with a total market capitalisation of $350 billion trillion, equivalent to the GDP of two countries in Mexico and Pakistan at the time.　　Now, once gorgeous integration into the discrete, the United States "information Weekly" published in the article said "This is the most failed corporate merger ever." In this bear the industry too many expectations of the process of integration, some people happy excited, some helpless sigh.　　Who is the ultimate catalyst for the play? What we have been alerted about through this merger is worth thinking about.　　The most intolerable thing about "big" is that the person who brokered the deal was "big is good".　　Time Warner wants to use AOL's platform strength and advantage to enter new media market, while AOL needs Time Warner's cable TV business as a new growth point, this is the starting point of the marriage between the two. One is the soaring price of the new economy, and the other is the struggling veteran media company.　　In fact, at the beginning of the marriage, potential problems have begun to emerge. At the time, AOL had very little business income, most of which faced heavy losses, but only through public offerings that turned into a company with billions of assets, but investors were optimistic about their growth prospects.　　In addition, some investors worry that the merger will slow AOL's growth rate by Time Warner.　　The news came soon after the merger of two companies: Time Warner said that AOL could sell it at any time if it could not reverse its loss-making operations.　　The subsequent progress shows that the two sides ' union did not achieve the desired results. The dotcom bust in the late 90, coupled with the impact of broadband Internet access on dial-up services, has led Time Warner, AOL's advertising revenue has been gloomy, and Time Warner's intention to use the former network to develop its existing business has naturally failed. By 2002, AOL was the undisputed boss of dial-up connections, but the era of broadband had arrived.　　While cable TV and local phone companies are the main providers of broadband connections, and AOL, which is known for dial-up connections, is largely unable to upgrade customers, it is Time Warner's obsession with the unprecedented resources that AOL has made for the transition to broadband connections. AOL had only a small portion of its assets in the US online-Time Warner Corporation in 2003, and the total assets of the merged companies were shrinking.　　On the September 17 of the year, AOL-Time Warner announced the change of company name to Time Warner, and the company logo changed from the original US online logo to the former Time Warner logo. A year ago, analysts valued AOL as an independent unit at $20 billion trillion, and now the value of a is down to around $5 billion.　　After the merger, AOL's market capitalisation had plummeted by half, its Internet access services had fallen by two-thirds, and subscriber numbers had plummeted from 27 million in 2002 to 6 million in the first quarter. It is noteworthy that AOL has its aim and ICQ, but it has not become the United States Tencent.　　Well-known bloggers, industry commentators Bo that, after the merger with Time Warner, AOL has been in non-stop tossing, betting ads, ignoring the consumer business, making its fine assets continue to depreciate, "eventually reduced to holding a golden begging to eat".　　Some analysts said that the combination of the failure of a number of reasons, such as corporate culture is not harmonious, the management of conflict is inevitable, the merger target is not clear, but the most intolerable is that the person who set up the deal with the concept of the people is "big is good." 2008, the economic crisis began to hit, the fourth quarter of last year, AOL operating losses as high as 1.9 billion U.S. dollars.　　As of April 30 in the first quarter of this year, AOL when revenue fell 23%, advertising camp contracted water 17%, search revenue fell 12%, third party revenue fell 29%. In addition, AOL last year 850 million dollars to buy Bebo, to enter social networking sites, this is the second internet bubble in the failure. All this has made AOL's business a total hit bottom.　　Meanwhile, revenue from the publishing business has continued to decline, with the net profit of Time Warner Corporation in the first quarter of this year also sliding 14% per cent.　　With a heavy burden, splitting AOL became the smartest choice for Time Warner.　　Time Warner will lose AOL's fat "cash cow" after the break-up of the new test. Major changes in the enterprise, no one is not related to the major adjustment of personnel.　　Time Warner is no exception.　　In March this year, Time Warner replaced AOL's CEO and president, Armstrong, president of Google's North American advertising and sales business, reins, which was thought to be a preparation for a break-up of AOL. 2006Google gained 5% of its shares by injecting $1 billion into a O L.　　Since then, Armstrong, who has long been responsible for Google's advertising business in North America, has served as a facilitator between Google and AOL. Obviously, Armstrong is very knowledgeable about AOL, and his experience and relationships with American advertisers have helped boost AOL's advertising business, a Time Warner's Abacus.　　In addition, Armstrong's inauguration, AOL and Google's partnership will be deepened, he is likely to be the accumulation of Google headquarters in the advertising business experience of the transfer to AOL, which is out of the current plight of AOL is very good. As the break-up is finalised, the way forward is Armstrong's first priority. "This is a good opportunity for AOL and its partners," Armstrong said. After becoming an independent public company, AOL can strengthen its core business, introduce innovative products and services, and increase its strategic options.　　"At the moment, Mr. Armstrong has been working with a large number of employees at AOL's U.S. offices, and a comprehensive, detailed assessment and investigation of AOL's large products and services to determine the ultimate mission position and to recreate AOL's past glory." For Time Warner, when AOL was divided, it seemed to be finally free. "Spin-off is a key step in Time Warner's restructuring plan. This will give the two companies greater flexibility at the operational and strategic levels, which is the ideal outcome for Time Warner and AOL.　　"said Jeff Bewkes, chairman and CEO of Time Warner," Bewkes. But the network version of Fortune magazine said: "After the break-up, Time Warner will lose AOL, the fat" cash cow.　　According to industry estimates, despite huge losses in 2008, AOL contributed about One-third of cash flow to Time Warner (excluding cable TV), while AOL's current share of Time Warner cash flow was about 20%, up from $1 billion trillion, according to Time Warner's data.　　After the break-up of AOL, Time Warner's free cash flow will be reduced from about 5 billion U.S. dollars to 4 billion dollars or lower, 1 billion of dollars cash flow will also follow the "Rain Blow", for Time Warner, is tantamount to the loss of a fat "cash cow." Time Warner's own cash flow has slipped 12% in the first quarter of this year. In the financial crisis, the amount of cash flow and the growth rate of cash flow play a vital role in Time Warner.　　In the future, how does Time Warner make up for lost cash flow? This is the first thing that will be considered by the Knicks and the new test that he is facing. The industry has been rumored to be the next step to split the era of companies. As early as April this year, when asked about the possibility of a spin-off, the company said future publishing might be part of Time Warner, "but no decision has been made yet." ”