AOL Time Warner May Be Interactive TV Giant
It’s too soon to tell what impact, if any, the merger between America Online Inc. and Time Warner Inc. will have on e-commerce, but expectations are enormous. It is obvious that the new company will likely merge its Internet and cable TV services, making it an instant big player in the interactive TV arena. It is also not unlikely that AOL will continue using positioning on its portal to lure visitors to the e-commerce sites of its various business partners.
“It’s an absolute example of the convergence of content and e-commerce,” says Michael Petsky, chief executive officer, Winterberry Group LLC, New York.
He notes that the deal increases AOL’s presence in Interactive TV because it will now own the distribution assets, but may make many of its business partners and strategic allies uneasy. Owning Time Warner might make the Internet portal company look like a competitor in those industry sectors in which Time Warner is a player.
In a deal that still has to be approved by government regulators, AOL will buy Time-Warner in a $166 billion stock-for-stock merger, producing a new company that has been valued at $350 billion. (AOL’s market value is approximately $164 billion; Time Warner’s, $97 billion.) AOL shareholders will own a majority stake of 55% of the new company, AOL Time Warner. The deal is expected to be complete by the end of the year.
AOL chairman and chief executive officer Steve Case will be chairman; Time Warner’s chairman and CEO will be CEO. Combined revenue may top $30 billion.
AOL gains access to Time Warner’s assets in traditional media, while Time Warner captures AOL’s 20-million-member audience. In a statement, Case said, “By joining forces with Time Warner, we will fundamentally change the way people get information, communicate with others, buy products and are entertained.”
In a separate deal from the buy-out, AOL disks will be included in Time Warner mailings; Time Warner’s RoadRunner Internet service will carry AOL services; and Warner Bros. stores will distribute AOL disks to customers.
