Just eight years ago in 2001, Time Warner paid $147 billion to buy AOL. Time Warner even went so far as to add the AOL name to the company’s corporate brand, creating AOL Time Warner. Fast forward to 2009, and AOL has been draining money from Time Warner for years. Finally, Time Warner announced that it’s cutting ties with AOL and spinning it off as a separate public company in a press release distributed today. But is it too late for AOL?
As one of my undergrad professors always reminded his students, business is cyclical. Companies merge and centralize, and over time, they split apart again and become more decentralized. History repeats itself again and again, and so does business. Time Warner got too big. Just as AT&T did in the 1990s, Time Warner couldn’t handle all the various, disjointed aspects operating under its umbrella and realized, it’s time to concentrate on its core to survive. First, it spun off it’s cable and broadband Internet services business, and now, it’s AOL’s turn to break free of the Time Warner corporate stronghold. Time Warner has made the decision to focus on it’s core — media — through movies, magazines, and cable networks. It’s about time.
With its pending release from Time Warner, AOL has a chance to revive its brand and rebuild its business in order to actually appeal to a broader audience with relevant products and services. Let’s face it — the online world moves far faster than a corporate conglomerate like Time Warner can move. A new AOL actually stands a chance of succeeding in the long term.
The Time Warner and AOL split should be a good thing for everyone, including consumers. What do you think?
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