The AOL Time Warner Black Hole

New York Post ^ | April 29, 2002 | Christopher Byron

[hitthefan]

The verdict is finally in: The AOL Time Warner merger should not have happened.

That's the message from last week's latest balance sheet convulsion to shake what was once known reverentially in certain parts as the House Of Luce.

Specifically, the balance sheet net worth of the largest media conglomerate on earth has now been slashed by more than one-third in a biblical-sized tidal wave of losses, even as the man who presided over the drowning - Mr. Gerald M. Levin - heads for the exit door, a $1 million per year "consulting" contract stuffed in his briefcase.

[moneyrunner]

Lord, what a disaster.

Don't look for a recovery on AOL any time soon. In fact hope that the bottom is reached soon.

[Savage Beast]

The day I told the Time magazine people never to send that disgusting propaganda rag to my home again, I felt that I had left something odious behind and bathed in purifying, cleansing waters.

[dutchess]

In our 25 plus years together, hubby and I are the kiss of death for investments.... Words cannot describe the losses...(stocks, property etc.) Several years ago hubby insisted we trade in some of my personal Walmart stock (that I had through my moms stock club) for then relatively new AOL. I was opposed because of our track record but finally relented to buy about $3,000 worth...The day after we bought it the AOL internet site crashed and was down for about a day....just our luck!) Then WOW.... It doubled and doubled and doubled and we now have a remodeled house, my folks have a boat...we didn't have to borrow for taxes for a few years (although the capital gains are a BITCH) The rest has TANKED but.... not a bad return... It was a fun ride while it lasted. When Time Warner entered the picture I really wanted to sell just for principal but as poor as it is doing now we STILL would have to pay friggin capital gains!!!!! (i think it was around $3 per share when we bought!)I hear there is going to be a new conservative CEO. Am hanging in there....

[Retired Chemist]

An Excellent Cartoon On The Subject

[SolitaryMan]

I'm sure as heck glad none of my money went to finance this fiasco.

[irishjuggler]

Before the merger, America Online's Netscape browser business was broken out in financial filings as a separate operating segment so you could see its performance within the company. Now it's buried within AOL, and its performance is no longer visible.

How long before AOL officially pulls the plug on Netscape?

[RippleFire]

a $1 million per year "consulting" contract

Whew - I could use the the $1M/year and I'm sure I couldn't do a worse job.

[Cookie123]

And of course since this is primarily a New York-based media company, there are few news stories about all the “poor little people” who have lost their life savings. No stories on the Evening News about the widows and single Moms who cannot pay their mortgages because their AOL stock is now worth zilch. No congressional hearings with outraged Senators standing up for the Common Man who so innocently put his trust and his money in this company. If the losses are of this magnitude, there are plenty of little people out there who got stung big-time by this thing. But, no one in the mainstream media seems to be talking about THAT. Compare that to all the hype about Enron. All the insinuations about Bush, Cheney, and who gave money to who, who played golf with who etc. Bernie Goldberg was certainly RIGHT.

[beckett]

Steve Chase pulled off one of the most amazing deals in business history when he talked Gerry Levin into selling Time/WB to AOL. Even after all that has gone down since, you still have to take your hat off to the guy.

Byron doesn't even mention Chase in this piece. I hope it's not because he's underestimating Chase, as so many others have, including Gerry Levin.

Chase is superfast to find solutions to any management problem presented to him. Now that he has what he wants, i.e., Time/WB, and now that the economy is recovering, I wouldn't be surprised if this $54 billion write-off is the last serious blow to the company for as long as Chase is there. The guy has the golden touch.

[beckett]

Chase = Case

[Timesink]

How long before AOL officially pulls the plug on Netscape?

Don't count on it. AOL and CompuServe are switching their built-in browser from IE to Netscape in their next upgrades.

[fire and forget]

You're exactly right. Had the bozos who brought this dabacle on Time Warner had any connection with Bush whatsoever, this would be an enormous issue to dems, ever distraught over the sufferings of the little people, and to the popular media which like elected dems will take any opportunity to villify Republicans; we'd have Senate hearings, news conferences and the rest 'till our ears bled featuring the usual who's who of the dem elite.

In fairness, though, ENRON execs new what was up and apparently had reason to know (wishful thinking aside) that things wouldn't turn around and yet kept on with the shady accounting to the SEC and investors, whereas the Time Warner people were just plain stupid.

[1Old Pro]

When you want the weather, look outside.

Using this approach on AOL, use AOL and most people quickly become disgusted with their multiple pop-ups which get in the way of serious surfing.

Once you use netscape or Explorer you wonder why AOL is even necessary. It isn't. It offers no value added for all the confusion and roadblocks they throw at you.

I've always said, it may be a good first ISP for newbies, but it won't be their ISP for long. Thus, they will lose money.