Question

Why was the AOL/Time Warner merger a good idea?

What was the single biggest flaw in the AOL/Time Warner transaction?

Was this transaction doomed to fail?

Answer 1

AOL/Time Warner merger was a good idea because it provide Time Warner lots of new user to the it content and at the same time it also provide the AOL very good content to its user it was like win win situation on the ideal world. It was supposed to create a two market leader in different stream of media section to create huge synergy.

During the time when this merger was happening there was a huge dotcom bubble due to which value of AOL fall like anything and it has to write off the $99 Billion in goodwill. But the biggest challenge was the pricing of the Time Warner which was greater than AOL i.e., $20 which makes this deal a failure.

Yes this transaction doomed to fail because the pricing of Time Warner was $45 per month which is $25 more than AOL thus it didn't make sense for many user to enroll for both.