So Much For Those Synergies Between Time Warner Cable And AOL, Huh?

from the nice-work,-guys dept

While the AOL/Time Warner merger has gone down in the record books as one of the worst mergers ever, I still contend that it could have gone much better if stronger management had been in place. Most specifically, there were obvious synergies between aspects of Time Warner and AOL -- but petty squabbles and turf wars kept most of those synergies from being realized. The most glaring and obvious of these was Time Warner Cable (or RoadRunner) and AOL. Both offered internet access, and it seemed perfectly reasonable to merge the two properties, and use RoadRunner to upgrade all those dialup users onto broadband, and then keep them engaged with all the Time Warner content. Of course, the Time Warner content people freaked out about content on the internet of course, so that would never have worked -- but the failure to link up RoadRunner and AOL never made any sense.

In fact, the two services began aggressively competing with each other. Then, after three years, someone finally realized that maybe the two should work together and made an announcement saying so. Of course... an announcement without action is worthless. So, another year goes by and another exec trots out with an announcement that the two divisions will work closely again. And again... nothing. Give it almost another year... and yet another announcement. Sense a pattern? In the end, the two groups never actually did combine, and with today's announcement that Time Warner is selling off the cable business entirely, it just puts an exclamation point on all these years of keeping the two businesses separate. Of course, in selling off Time Warner Cable, it will also likely lead to speculation that the company will sell off AOL (or merge it with Yahoo -- remember that plan?) as well -- though, as an entirely separate entity.

While I tend to be skeptical of mergers based on vague "synergies," it's still rather amazing that in all this time, no one at Time Warner ever got these two divisions together -- and now the company may end up selling each off separately. In the end, this was a deal that only worked out for the investment bankers. Remember, they love to convince companies to consolidate one year and diversify the next -- because they make money on both transactions.

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  • identicon
    oregonnerd, 1 May 2008 @ 10:15am

    businesses, synergy, and benefit to the consumer

    Which all goes to reinforce the fact that a business is there to make money, and the consumer is the pain-in-the-ass who might stand in the way of getting it.

    reply to this | link to this | view in chronology ]

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