The Turnaround of AOL

 
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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Case Details:

Price:

Case Code : BSTR195 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

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Case Length : 19 Pages
Period : 2001-2005
Organization : AOL, Time Warner
Pub Date : 2006
Teaching Note : Not Available
Countries : China
Industry : Media

Abstract:

The case discusses the problems faced by Time Warner after the merger with AOL in the year 2001. The merger created the largest media company in the world. However, with the Internet bubble bust, several dotcom companies went bankrupt which adversely affected AOL's advertising revenues. Moreover, the number of dial-up subscribers was also constantly going down which affected the overall revenues and profitability of AOL. The case explains the strategies adopted by Richard Parsons, the CEO and Chairman of Time Warner and Joe Miller, the CEO of AOL, to turnaround AOL. One of these strategies was to provide free content on its portal which helped AOL attract more online visitors thus increasing its advertising revenues. AOL's success led Google, the leading search engine in the world, to enter into a global advertising partnership with the company and acquire a 5% equity stake in AOL for US$ 1 billion.

Issues:

» Turnaround Strategy of AOL
» Synergies in the merger between traditional and online media company

Contents:

  Page No.
Aol - Back On Track 1
Background Note 2
The Problems 5
Accounting Irregularities 5
Declining Subscriber Base 5
Shareholders' Wrath 6
The Revival Strategy 7
Offering Free Content 8
Growth of Advertising Business 9
Television Goes to the Web 10
Partners Beckon 11
The Road Ahead 12
Exhibits 14

Keywords:

AOL, Time Warner, Corporate Turnarounds, Richard Parsons, Merger Integration, Failed Merger, Merged Synergies, Reorganization, Accounting Irregularities, Subscriber Base, Superstore on the Web, Online Advertising, Web Television, Content Partnerships

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