The deal also had ramifications for television networks, cable networks, and radio networks (Lehrer, 2000).
2. Time Warner was struggling to integrate "new media" into its business (Time Warner, 2006). A merger with AOL would shorten the learning curve. Time Warner's media properties would immediately gain an online audience that was 20 million people strong, along with online marketing know-how (Dembeck, 2000; Time Warner, 2006).
3. Synergy underpins mergers. Synergy means that the value of the merged entity is greater than the sum of the value of the individual entities. First, AOL and Time Warner had to look at how to leverage their assets the best by inventing new, content-rich narrowcast services and creating the next generation of media and content (Lehrer, 2000; Merging Past and Future, 2000). Secondly, AOL and Time Warner had to look at how to leverage their marketing efforts in terms of relating to their audience because the Internet has fragmented and created a very heterogeneous media landscape (Lehrer, 2000). Marketing efforts can be leveraged by recreating an ability to capture the consumer, aggregating the market, and capturing the public's attention in an increasingly fragmented world (Lehrer, 2000). Third, they also had to overcome the challenge of the potential clash of cultures between very different media businesses (Merging Past and Future, 2000). Lastly, they had to face cost-cutting challenges. Cost-cutting efforts can be achieved by rationalizing, integrating, and streamlining IT systems, as well as removing duplication in backoffice staff and infrastructure (Anonymous, 2000).
4(a) The company's financial results deteriorated rapidly after the merger. The net income decreased from $1,121 million in 2000 before the merger to a net loss of $4,895 million in 2001 after the merger. Also, the value of the merged company dropped and goodwill of $9,079 million had to be written off (AOL Time Warner Inc., 2003a). The net loss reached a whopping $98,696 million in 2002 (AOL Time Warner Inc., 2003b)
4(b) The turnover occurring among high-level executives was very high. In 2001, J. Michael Kelly, Executive Vice President and Chief Financial Officer, as well as George Vradenburg, III, Executive Vice President, Global and Strategic Policy no longer appeared in the financial statement of AOL Time Warner Inc. as "executive officers of the company" (AOL Time Warner Inc., 2001 AOL Time Warner Inc., 2002). In 2002, six high-level executives were no longer with the merged company. They are: (1) Gerald M. Levin, Chief Executive Officer, (2) Robert W. Pittman, Co-Chief Operating Officer, (3) David M. Colburn, Executive Vice President and President of Business Development for Subscription Services and Advertising and Commerce Businesses, (4) Kenneth B. Lerer, Executive Vice President, (5) William J. Raduchel, Executive Vice President and Chief Technology Officer, and (6) Mayo S. Stuntz, Jr, Executive Vice President. Also, Stephen M. Case, Chairman of the Board since the consummation of the Merger, announced that he would step down as Chairman of the Board of the Company in May 2003 (AOL Time Warner Inc., 2001; AOL Time Warner Inc., 2003b). By 2003, only 2 of the 13 high-level officers in 2000 remained. They are Richard D. Parsons and Paul T. Cappuccio (AOL Time Warner