Commentary

Time Warner Divorces AOL, Corporate 'Synergy' Now Passe

by Wayne Friedman , Staff Writer, May 29, 2009

AOL is now left on the street by Time Warner -- looking to get cab fare to its next gig. So too is that now-passé media business word "synergy."

The biggest merger, and disaster, in corporate history -- the $150 billion-plus deal between AOL and Time Warner in 2001 -- came with the promise of combining traditional media with new digital media in massive marketing projects.

The deal amped up the promise of media's clout: the content/technologies from one media company that can be shared and leveraged and promoted throughout all its divisions in big ways.

Media companies like Walt Disney Co. still extend their branding machine for the likes of "Hannah Montana" through tours, new digital platforms, and record deals. But AOL-Time Warner's promise turned out to be big entertainment vaporware -- stuff not seen by the naked eye.

The media business is a lot more humble these days. Just take a look at their stock prices and all the billions of dollars of write-downs in recent months. This is not to say many won't step in some fresh dung down the road.

The promise of modern-day media synergy is at a lower volume level these days: Amazon's Kindle won't release sales figures; NBC Universal's Jeff Zucker won't go into detail about the financial situation of Hulu.

In this vein, the upcoming TV upfront ad market is poised to promise somewhat less. Some cross-advertising selling deals will make appearances, but most current efforts are more modest, more targeted in scale.

How many big media agency-TV network announcements on the order of OMD/ Disney-ABC $1 billion pact of a few years ago are you seeing these days?

AOL-Time Warner taught us media and entertainment is a valuable part of consumer lives -- but glaringly, not all of it.

2 comments about "Time Warner Divorces AOL, Corporate 'Synergy' Now Passe".

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Steven Donahue from ASM, May 29, 2009 at 1:16 p.m.
The Nightmare on Peachtree Street is finally over.
After nearly nine years and thousands of lost jobs later, the ignorance of TW has come full circle. Without question, the opportunity was there in 2001 to create an unparralleled universe of on demand news, movies, music, sports, IM...the list goes on and on.
But a funny thing happened on the way to the merger. Someone forgot to invite the platform of transportation, the delieverer of this tremendous content. TW was the product, AOL the internet conduit but who's the common carrier? AT & T? Or maybe MCI? Was Verizon even on the horizon?
Relying on third party vendors to make that all important "connection" with your audience was one of the largest oversights in the merger. If they could think outside their over-priced common stock price for one minute, they might have seen this missing piece would have provided the necessary bridge to all that wonderful content to all those hungry eyes and ears around the world. And maybe just maybe, CNN would have maintained its stronghold as the number one news network, and Time Warner Pictures might have done better at the Box Office and the magazine unit would be flourishing instead of wilking because all the parts of the communication puzzle would have been in place to rule the media world.
Now, its hit the road AOL....and don't let the door hit you on your way out.
Reply

Tom Ficara from Margate Entertainment, May 29, 2009 at 7:39 p.m.

For those of us who have been around since the salad days of cable networks in the 1970's and 80's, none of this is a surprise. For some reason, the tech portion of the internet became empowered with the marketing. The result was a myopic, follow the leader path that ignored the very history of commercial text, audio, and video. Until any endeavor, be it TVs in households, color TV in households, cable TV in households, HDTV in households, reaches that 50% mass, its all a crapshoot.
In the end the same basic drives that worked for magazines, radio, TV, cable TV, and now internet are the same. Now that the geeks are out of the equation, the basic media business can resume and the results will be that internet TV will look little different than the established model. However, with so many 'channels' available, you will need a really spcial product to sell a subscription. The vast amount of media will be advertsing supported. Sound familiar?