internet-stained wretches

This Has Happened Before: Comparing the AOLington Post to AOL Time Warner

In the early years of a decade, a struggling media company hamstrung by technological changes tries to reinvent itself by joining forces with a young upstart company that is led by a charismatic leader… This has all happened before, and most likely it will happen again.

AOL’s acquisition of the Huffington Post is giving tech and media industry insiders a gnarly flashback to the first time around: The $350 billion merger of AOL and Time Warner, the consensus pick as worst merger of all time. Eleven years later, the parallels between the two deals should frighten everyone involved.

  AOLington Post merger AOL Time Warner merger
Major Players AOL's CEO Tim Armstrong, HuffPo co-founders Arianna Huffington and Kenneth Lerer AOL's CEO Steve Case, Time Warner CEO Gerry Levin
Price tag $300 million in cash and $15 million in stock $182 billion in stock and debt
Cheesy quips based on a fading cultural touchstone Kara Swisher: "You've Got Arianna"; Slate: "You've Got Pageviews" FCC Commissioner Susan Ness, "AOL and Time Warner, you've got approval.”
Euphoric press releases: Arianna: “it will be like stepping off a fast-moving train and onto a supersonic jet.” Armstrong: "We believe in brands, quality journalism, and the positive role of communities in the world." Arianna and Armstrong: "1+1 = 11" The deal will create the “the world's first fully integrated media and communications company for the Internet Century . . . By merging the world's leading Internet and media companies, AOL Time Warner will be uniquely positioned to speed the development of the interactive medium and the growth of all its businesses.
Previous High-Profile Acquisition Armstrong purchased hyperlocal news site Patch for $120 million (it is losing about $30 million a quarter) and tech news site TechCrunch for $25 million. A year before Time Warner, AOL bought the remnants of Netscape for $4.2 billion, after Microsoft crushed the web browser by bundling Interner Explorer with Windows.
Critics "I thought Arianna Huffington and Kenny Lerer were reinventing news, rather than simply flipping to a flailing conglomerate. ... Is this a fearsome Internet conglomerate or simply a roach motel for once lively websites?” -- Gawker founder Nick Denton. "Tim Armstrong says '1 + 1 will equal 11.' Really? That wasn't my experience." -- Steve Case. "The system has become the plaything of a handful of billionaire investors who use their power to commercially carpet-bomb every possible moment of our lives." -- Robert McChesney, author of "Rich Media, Poor Democracy."
Reincarnations Ken Lerer, co-founder and seed investor in Huffington Post; Bob Pittman, invested $10 million in Huffington Post; both made serious bank on the merger Ken Lerer, executive vice president of AOL Time Warner; Bob Pittman, co-COO of AOL Time Warner; both edged out after the merger
What They Aren't / Weren't Prepared For A total revamp of Google's algorithms to punish robo-aggregation and reward original content, or the ascension of Facebook-style social search that would have the same result. The death of dial-up.
Results TBD “In broad terms, the disastrous merger of Time Warner and AOL epitomizes the culture of corporate America and Wall Street in the late 1990s. It speaks to the speculative mania that gripped America at the end of the twentieth century.” Nina Munk, “Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner.”
This Has Happened Before: Comparing the AOLington Post to AOL Time Warner