Aol Time Warner- What Went Wrong

Verizon has gone through many changes in the last few years. The communication industry is extremely competitive and this company would not have had a chance of forming at all, except for the government ordered breakup of AT&T in 1984. Their targeted areas of communication are cellular, paging and PCS services for corporate and individual customers. They have been trying to expand their business for corporate local goods and services.

The time is now 1995; the internet is slowly evolving, and just as the company survived the arrival of television and other technology so it must with the internet. Convinced the internet will have

By 1995, The Walt Disney Company was becoming one of the largest companies in media and in the same year they announced they were going to acquire ABC Inc. for $19 billion (Fabrikany). This was the one of the largest cooperate take-overs at the time, and to this day The Walt Disney Company owns ABC and all of it affiliated stations, including: ABC News, ABC Entertainment Group, ABC Owned Television Station Group, and Disney/ABC Television Group.

But in the period following the official merger, financial problems would start to beset the newly formed parent company. The first issue of major effect was the FASB implementation of SFAS142 which required annual testing of impairment to goodwill (and other intangible assets) instead of annual amortization. This ruling became effective for the year 2000, just twelve months after the official merger. It forced AOL TIME WARNER to take a one- time charge against income of $54 billion in the first quarter of 2002, and an additional $45.538 billion in the last quarter of 2002. This was an astounding amount of nearly $100 billion dollars, predominantly attributable to the erosion of AOL’s market value.

Effective as of May 1, 2012, ABC Company merged with XYZ Company through a stock-for-stock merger exchange. As a result of the merger, 2 million shares of company stock were issued for each share of XYZ Company outstanding stock. The merged company will retain the name of ABC Company. The merger was the direct result of ABC Company's strategic seven-year plan to expand operations by merging with smaller

Recent years have seen a major growth in the Walt Disney Company "enterprise" as one would call it. Growing from movies, TV, theme parks, stores to Broadway shows, Disney Company has set a benchmark for other companies. Early in 1996, Disney completed its acquisition of Capital/ABC. The $19 Billion deal brought the country's top television network to the Disney, in addition to 10 TV Stations, 21 radio stations, 7 daily newspapers, and ownership positions in 4 cable networks.

In the editorial, “Verizon’s AOL deal: ISPs go searching for content,” the times editorial board argue it necessary for the FCC to remain neutrality to other ISPs. To show how the FCC did give preferential, some ISPs merge in with other mobile phone network, have Internet traffic, and lack of great services. Verizon, the mobile phone network, decides to buy the dial-up Internet service AOL, just for its expertise in the advertising field. AOL used to provide their subscribers with great website services, but overtime other ISPs start to provide better quality services. People, who develop the sites, argue that their ISPs provide bad services because the FCC favors their own sites and other ISPs that give them money. However, last February,

In return, these companies must give preferential treatment in promotion and the like to Microsoft. One example is AOL's new 4.0 browser is specially designed to work best with the Microsoft Internet Explorer 4.0 browser. Much of the increase in AOL's clientele base can be attributed to the combined efforts of Microsoft and AOL. Microsoft is not only working with ISP's, but also with companies that build and maintain web pages and servers.

1. What accounting approach has AOL used in the past that it is now changing (related to the $385 million)?

From 1984 until 1996 AT&T was an integrated telecommunications services and equipment company, succeeding in a newly competitive environment. In 1995 On September 20, AT&T announces that it is restructuring into three separate companies: a services company, retaining the AT&T name; a products and systems company (later named Lucent Technologies) and a computer company (which reassumed the NCR name). Lucent is spun off in October 1996, and NCR in December, 1996. Three years later AT&T announces general availability of its local residential telephone service in New York with a bundled plan called "AT&T Local One Rate New York." This is AT&T's first general reentry into the consumer local telephone business since the breakup of the Bell System. It occurs under the provisions of the Telecommunications Act of 1996. The Telecommunications Act triggered dramatic changes in the competitive landscape. SBC Communications Inc. established itself as a global communications provider by acquiring Pacific Telesis Group (1997), Southern New England Telecommunications (1998) and Ameritech Corp. (1999). In 2005, SBC Communications Inc. acquired AT&T Corp., creating the new AT&T. With the merger of AT&T and BellSouth in 2006, and the consolidated ownership of Cingular Wireless and YELLOWPAGES.COM, AT&T is positioned to lead our industry in one of its most significant transformations since the first

Firstly, the acquisition would cause Disney’s market power to rise due to the increase of its resources and capabilities to compete in the industry and also a greater share in the market. This is of great importance due to the intense competitiveness in the industry that is dominated by only a few key players. Any increase in

     In today’s telecommunication market there is a lot of competition by industry giants such as Sprint,

Share holders suffered even more, as stock prices plummeted from the time the merger was first announced. A major part of the failure of this merger was the fact that developing a “learning culture” was never considered, and no strategic vision was created for the newly merged organizations. For example Time Warner Cable’s high speed Internet services, Road Runner, as part of its profitable cable operations was never integrated with AOL as Case explained in his 2005 article in the Washington Post (6/ 11/05: B01). The first AOL Time Warner Annual Report (2000) claimed that it was fostering “… a nimble, entrepreneurial culture that recognizes that it can only succeed if everyone supports the new organization based on a shared set of values and common goals.” Unfortunately, the team-work necessary to integrate the two companies never happened, because there was no shared strategic vision of what the merger should be, and where it would be going. Merger Failure and the Need for a Culture of Learning According to some estimates, 85% of merger failures are related to the mismanagement of cultural issues. Awareness of cultural differences is then seen as an issue of primary concern when organizations merge. According to Miller (2000:8): “Once you develop an understanding of the current culture, and have compared that with the goals of the merged

Time Warner is also taking part in joint ventures which bring it more opportunities to advertise and sell its products. For example, in 1993 Time Warner and US West worked together to improve U.S. cable systems to an interactive fiber-optic data highway that could lead to such direct services to the home as music on demand and video on demand. This deal was based on U.S. West investing $2.5 billion in Time Warner Inc. which gave them a big stake (25.5%)in

BMG was the first major company to settle the online website and attract many Internet users. However, it missed the golden opportunity to sell music to customers earlier. It focused on promotion at first. Still, through the collaboration with America On Line (AOL) was a unique strategy that