One anniversary that surely won’t be celebrated in Burbank in 2020 is the one that marks 20 years since Warner Bros. merged with America Online.
On Jan. 10, 2000, Time Warner — then the home of Warners, HBO, CNN, TBS, Time Warner Cable and Time magazine — was bought for $182 billion by AOL, which had 30 million subscribers using its dial-up service to access the internet and email. The union combined the world’s largest media conglomerate with the world’s largest internet provider.
The Hollywood Reporter said the deal created “a $350 billion monolith prominent in virtually every corner of the new and old media universe.” With power like that, what could possibly go wrong?
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Everything, it turned out.
Within a few months, the economy fell into recession, the dot-com bubble burst and the AOL-Time Warner deal was being called “the worst merger in history.”
What grievously wounded AOL was the rise of broadband internet access, which subsequently killed off dial-up. In 2002, the combined company posted a loss of $98.7 billion, still the record for the worst annual loss in corporate history. Ted Turner, who had sold his Turner Broadcasting System to Time Warner in 1995, once estimated that because of the merger, he lost roughly $8 billion, or 80 percent of his wealth.
What happened to Turner happened to many shareholders and staffers on a lesser scale. “It was incredible hubris and shortsightedness that destroyed the lives of employees who saw their retirement accounts wiped out,” says THR‘s Paul Bond, who covered the merger.
“The smartest people on the planet didn’t recognize a stock bubble when they saw it.”
In 2009, Time Warner spun off AOL as an independent company, and Verizon bought it in 2015 for $4.4 billion. In 2018, AT&T acquired Time Warner for $85 billion.
This story first appeared in the Jan. 8 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
