On January 10, 2000, in one of the biggest media mergers in history, America Online Inc. announces plans to acquire Time Warner Inc. for some $182 billion in stock and debt. The result was a $350 billion mega-corporation, AOL Time Warner, which held dominant positions in every type of media, including music, publishing, news, entertainment, cable and the Internet.
The AOL Time Warner merger came at the height of the so-called “Internet bubble,” when dot-com businesses were on a meteoric rise and their future seemed limitless. The idea was to combine Time Warner’s impressive book, magazine, television and movie production capabilities with AOL’s 30 million Internet subscribers to form the ultimate media empire. Under the terms of the merger, which was cleared by the Federal Trade Commission in December 2000 and formally completed in January 2001, AOL shareholders owned 55 percent of the new company while Time Warner shareholders owned 45 percent. AOL’s co-founder, chairman and chief executive officer, Steve Case, became chairman of the new company, while Time Warner chairman and CEO Gerald Levin was named its CEO.
The potential windfall promised by the plan to sell Time Warner content through the AOL network never materialized, and when the Internet bubble burst in 2001, the company’s losses reached record proportions. Levin, widely blamed by shareholders for allowing Time Warner and its stable old-media assets to be effectively taken over and dragged down by the ailing new-media division, resigned in December 2001. He was replaced by Richard Parsons, a decision that later contributed to increasing internal tensions and the departure of chief operating officer Bob Pittman, who had been passed over in favor of Parsons.
In 2002, as investors pulled out en masse of many Internet-related stocks, AOL Time Warner reported a quarterly loss of $54 billion, the largest ever for a U.S. company. Time Warner spun off AOL in 2009. In 2018, AT&T acquired Time Warner.