Stealing Time

Stealing Time: Steve Case, Jerry Levin, and The Collapse of AOL Time Warner :

Stealing Time: Steve Case, Jerry Levin, and The Collapse of AOL Time Warner Presentation by: Stephanie Urban

Plot Summary: :

Plot Summary: January 2000, AOL and Time Warner decided to make the largest merger in United States history. This brought the number 1 internet company and the countries leading entertainment business together to make technology bigger and better than ever before. Little did they know only three years later this merger would lead to a terrible collapse. Top executives resigned and the company lost billions of dollars. The company went down in market value. Lastly, the US government started an investigation on this companies exact dealings. In the end it all went wrong.

Important People :

Important People Steve Case – CEO and then Former Chairman, AOL James Kimsey - Founding Father of AOL Jerry Levin – CEO of AOL Time Warner Robert W. Pittman – Founder of MTV. Attempted to rescue AOL from financial crisis.

Time Line of Events:

Time Line of Events In 1992, AOL went public on the Nasdaq Stock Market. Here the company raised 66 million. Steve Case became the CEO of AOL and became a very rich man. By 1993, America Online could have been known as a small engine that needed a little push. Matt Korn from IBM did research and found that aols server would only allow 2,300 users at a time. Korn discovered that AOL could not sustain any more users on the servers. He made a plan! His solution entailed expanding the telephone network, get more computers, open space and let the data through. Like Magic the numbers expanded!

Time Line of Events:

Time Line of Events May 1993, Bill Gates took notice to AOL and offered to buy the business. He figured Microsoft and AOL would make a great team. AOL denied the offer. By 1994, AOL had reached the one million subscriber mark. The market value had reached over $500 million subscribers making it the most expensive tech stocks around. By November 1995, AOL had over four million subscribers and 1,433 employees.

Time Line of Events:

Time Line of Events James V. Kimsey the founding chief executive of AOL relinquished his title to the then CEO Steve Case. Kimsey was happy that AOL had not claimed bankrupt and he became a millionaire. In April 1996, Steve Case made the cover of Business Week. June 1996, AOL moves to a larger headquarters in Virginia. Employees were overwhelmed from the new size of the company. AOL had now growed to 5 million subscribers.

Time Line of Events:

Time Line of Events In 1997, AOL hit the ten million mark and their capitalization valued $3.45 billion. By the end of 1998, AOL market cap reached $63 billion

Time Line of Events:

Time Line of Events By 1999, all was not well with Time Warner Company. In 2000, AOL and Time Warner Merged. The new company would now be known as AOL Time Warner. AOL purchase Time Warner for $164 billion. The merger was entirely completed January 2001. AOL would now own 55% of the new company whereas Time Warner Shareholders only owned 45%. Gerald Levin who was originally CEO of Time Warner would now be CEO of the new company. Steve Case would continue as Executive Chairman.

The idea of the Merger:

The idea of the Merger According to AOL president Bob Pittman, the idea would stand that the slow moving Time Warner would now work at internet speed. This would be accelerated by AOL. Their idea would be to add a catalyst and before no time the growth rate would be altered. When the merger was announced everyone had a vision that AOL Time Warner would reach into the home of tens of millions of customers. It was also thought that AOL would use Time Warner's high-speed cable lines so that subscribers would receive books, magazines, movies and music. This idea would had amounted to 130 million more subscriptions.

The Collapse:

The Collapse Growth and Profitability of this project stalled. This was a result of advertising and subscriber slowdowns that was caused by the burst of the dotcom bubble and economic recession of 2001. America Online’s value dropped dramatically. AOL Time Warner reported a loss of $99 billion in 2002. At the time this was known as the largest loss ever reported by a company. The government demanded the two companies to share information and show concessions and during this time stocks plummeted. The company then did their own investigation only to learn that they had improperly booked $190 million in revenue. The value of the AOL stock went from $226 billion to $20 billion.

The Collapse:

The Collapse Levin announced his resignation from the company in the fall 2001 to become effective May 2002. A new incentive program were granted based on the performance of AOL Time Warner. Cash Bonuses were relinquished and this caused resentment among the Time Warner division heads. They then blamed the AOL division for failing to meet expectations and dragging out the combined company. The growth targets made for the company were never met.

The Collapse:

The Collapse Pittman announced his resignation from AOL Time Warner after July 2002. He was burnt out from the company and had almost been hospitalized. It was known that he couldn’t handle the criticism. Most were happy of his departure and Time Warner executives were interested in undoing the merger. In January 2003, Steve Case announced he would not stand for re-election as executive chairman. Case resigned from AOL Time Warner in 2005.

The Collapse:

The Collapse In 2007, the new CEO for time Warner CEO Jeffery Bewkes made a plan to spin off Time Warner and sell AOL. This would create a smaller company. In 2009, Time Warner announced that it would spin off AOL was a separate company. The change occurred in December of 2009.

Time Warner and AOL Today:

Time Warner and AOL Today In August of 2010, Time Warner’s Latin division bought Chilean nationwide which is a television station in Chile. Time Warner has previously operated with the channel CNN in Chile. They are still operating. In November 2010, AOL desktop 9.6 upgrade was made. In march 2011, AOL will cut around 20 percent jobs or 900 workers among 5,000 workers. This decision was made due to the global recession. AOL is still operating.

In Conclusion,:

In Conclusion, Over time AOL executives felt they were being taken advantage off. They felt that the AOL company was loose and aggressive and Time Warner executives did the opposite and rebelled. The clashing cultures and conflicting managing styles clearly led to the downfall of these agencies This book covers the start, the rise, and the fall of AOL and AOL Time Warner as a company.