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Aol time warner merger

AOL Time Warner Merger

Term Paper On AOL & Time-Warner Merger


Financial Management

AOL-Time Warner, Inc. is a fully integrated, Internet-powered media and communications company. The Company was formed in connection with the merger of America Online, Inc. (America Online) and Time Warner Inc. (Time Warner), which was consummated on January 11, 2001 (the Merger). As a result of the Merger, America Online and Time Warner each became wholly owned subsidiaries of AOL Time Warner.

Business areas

The Company classifies its business interests into fundamental areas comprised of America Online, consisting principally of interactive services, Web brands, Internet technologies and electronic commerce; Cable, consisting principally of interests in cable television systems; Filmed Entertainment, consisting principally of interests in filmed entertainment and television production; Networks, consisting principally of interests in cable television and broadcast television networks; Music, consisting principally of interests in recorded music and music publishing; and Publishing, consisting principally of interests in magazine publishing, book publishing and direct marketing.


Time Warner Entertainment Company, L.P. (TWE) was formed in 1992 to own and operate substantially all of the business of Warner Bros., Home Box Office and the cable television businesses owned and operated by Time Warner prior to such date. Currently, the Company, through its wholly owned subsidiaries, owns general and limited partnership interests in 74.49% of the pro rata priority capital (Series A Capital) and residual equity capital (Residual Capital) of TWE and 100% of the junior priority capital. The remaining 25.51% limited partnership interests in the Series A Capital and Residual Capital of TWE are held by MediaOne TWE Holdings, Inc., a subsidiary of AT&T Corp. (AT&T). The Company and AT&T have been engaged in discussions regarding AT&T's interest in TWE. In addition, AT&T has delivered to the Company and TWE notice of its exercise of certain rights under the TWE partnership agreement that could result in a public sale or the purchase by TWE of some or all of AT&T's interest in TWE.

In October 2001, the Company acquired IPC Group Limited, the parent company of IPC Media, a publisher of consumer magazines in the United Kingdom. IPC owns approximately 100 consumer magazine brands, selling 350 million magazines annually. It is focused on five core areas: Women; Television; Home & Garden; Leisure; and Men's Lifestyle and Entertainment.

America Online

America Online, a wholly owned subsidiary of the Company, is engaged in interactive services, Web brands, Internet technologies and electronic commerce services. America Online's operations include two worldwide Internet services, the AOL service and the CompuServe service; "AOL Anywhere" services; Netscape; AOL local brands such as Digital City, AOL Moviefone and MapQuest; AOL messaging services such as ICQ and AOL Instant Messenger; and AOL music properties such as, Winamp and SHOUTcast. Utilizing its "AOL Anywhere" strategy, key services, features and content of the AOL service are available through multiple platforms and devices. Through iPlanet E-Commerce Solutions, its strategic alliance with Sun Microsystems, Inc., America Online also develops and offers easy-to-deploy, end-to-end electronic commerce and enterprise solutions for companies operating in, and doing business on, the Internet.

America Online competes for subscription revenues and members' usage with a large number of companies providing Internet access, including online services such as the Microsoft Network and AT&T Worldnet, local and national Internet service providers, cable Internet access providers, and telephone companies and other companies that provide Internet access among other services. It also competes more broadly for subscription revenues and members' usage with cable, information, entertainment and

media companies.


The Company's Cable business consists principally of interests in cable television systems. Of the approximately 12.8 million subscribers served by the Company at December 31, 2000, approximately 1.8 million are in systems owned by TWI Cable Inc. (TWI Cable), a wholly owned subsidiary of the Company, and approximately 11 million are in systems owned or managed by TWE. TWE's cable systems include approximately 6.7 million subscribers in a joint venture between TWE and Advance/Newhouse known as TWE-A/N; 1.1 million of these TWE-A/N subscribers are part of the Texas Cable Partners 50-50 joint venture with AT&T. TWE-A/N is owned 33.3% by Advance/Newhouse, 64.8% by TWE and 1.9% by TWI Cable. Time Warner Cable, a division of TWE, generally manages all such systems and receives a fee for management

of the systems owned by TWI Cable and TWE-A/N.

Filmed Entertainment

The Company's Filmed Entertainment businesses produce and distribute theatrical motion pictures, television shows, animation and other programming, distribute home video product, license rights to the Company's programs and characters and operate motion picture theaters. All of these businesses are principally conducted by Warner Bros., which is a division of TWE. The filmed entertainment business also includes New Line Cinema Corporation (New Line Cinema), as well as the Turner classic film and animation libraries, all of which are wholly owned through Turner Broadcasting System,



The Company's Networks business consists principally of domestic and international basic cable networks, pay television programming services, a broadcast television network, and sports franchises. The basic cable networks (collectively, the Turner Networks) owned by Turner Broadcasting System, Inc. (TBS), a wholly owned subsidiary, constitute the principal component of the Company's basic cable networks. TBS also operates several large advertiser-supported online sites, including the CNN family of Internet destinations. Pay television programming consists of the multichannel HBO and Cinemax pay television programming services (collectively, the Home Box Office Services), operated by the Home Box Office division of TWE (Home Box Office). The WB Television Network (The WB), a broadcast television network, is operated as a limited partnership in which WB Communications (a division of TWE) holds a majority

interest in the network and is the network's managing general partner.

The Turner Networks and the Home Box Office Services (collectively, the Cable Networks) distribute their programming via cable and other distribution technologies, including satellite distribution. The Cable Networks generally enter into separate multi-year agreements, known as affiliation agreements, with distributors that have agreed to

carry them.


The Company's worldwide-recorded music and music publishing businesses are conducted under the umbrella name, Warner Music Group (WMG). In fall 2000, the Company announced that it had terminated its previously announced agreement to combine WMG's global music operations with that of Britain's EMI Group plc.

In the United States, the Company's recorded music business is principally conducted through WMG's Warner Bros. Records Inc., Atlantic Recording Corporation, Elektra Entertainment Group Inc. and London-Sire Records Inc. and their affiliated labels, as well as through the WEA Inc. companies. WMG's recorded music activities are also conducted in over 70 countries outside the United States through various subsidiaries, affiliates and non-affiliated licensees. The WEA Inc. companies include WEA Manufacturing Inc., which manufactures compact discs (CDs), audio and videocassettes, CD-ROMs and DVDs for WMG's record labels, Warner Home Video and outside companies; Ivy Hill Corporation, which produces printed material and packaging for WMG's recorded music products as well as for a wide variety of other consumer products; and Warner-Elektra-Atlantic Corporation (WEA Corp.), which markets and distributes WMG's recorded music products to retailers and wholesale distributors. WMG also owns a majority interest in Alternative Distribution Alliance (ADA), an independent distribution company specializing in alternative rock, metal, hip hop and dance music

with a focus on new artists.

WMG's music publishing companies, Warner/Chappell, own or control the rights to more than one million musical compositions, including numerous pop music hits, American standards, folk songs and motion picture and theatrical compositions. The catalogue includes works from a diverse range of artists and composers including Madonna, Eric Clapton, Jewel, George and Ira Gershwin, Radiohead and Cole Porter. Warner/Chappell also administers the music of several television and motion picture companies, including Lucasfilm, Ltd. and Hallmark Entertainment. Warner/Chappell also owns Warner Bros. Publications, a major publisher of printed music, which includes CPP/Belwin, acquired in 1995. Warner Bros. Publications markets publications throughout the world containing the works of such artists as Shania Twain, The Grateful Dead and Led Zeppelin and containing works from the Chrysalis, Zomba and Universal music publishing catalogs.

In January 2002, WMG acquired the Word Entertainment division of Gaylord

Entertainment Company.


The Company's Publishing business is conducted primarily by Time Inc., a wholly owned subsidiary of the Company, either directly or through its subsidiaries. Time Inc. is a leading magazine and book publisher, as well as a direct mail marketer.

As of March 1, 2001, Time Inc. published 64 magazines, including Time, People, Sports Illustrated, Fortune, Money, Entertainment Weekly and In Style. These magazines generally appeal to the broad consumer market. Time Inc.'s trade publishing operations are conducted primarily by Time Warner Trade Publishing Inc. through its two major publishing houses, Warner Books and Little, Brown. In 2000, Time Warner Trade Publishing placed 37 books on The New York Times best-seller lists. Through subsidiaries, Time Inc. conducts worldwide direct mail marketing businesses. Time Life Inc. is a direct marketer of entertainment products such as music and videos. Its products are sold, both as single products and products in sets, by direct response, including mail order, television and telephone, through retail channels and catalogs, and, in some markets, by independent distributors. Music and video rights are acquired through outside sources and compiled internally into finished products. Time Life's domestic direct response fulfillment activities are conducted from a centralized facility in Richmond, Virginia.

Worth Of AOL & Time Warner Deal

"Deal originally valued at $164 billion".

When the deal was announced in January, it was worth $164 billion, excluding debt and options.

Aol, Time-Warner Merger Schedule

Jan. 10, 2000 (Announcement date): America Online and Time Warner announce merger agreement. Federal Trade Commission gears up for routine antitrust review.

Jan. 22: Time Warner and music giant EMI agree to merge.

Feb. 29: AOL CEO Steve Case and Time Warner CEO Gerald M. Levin appear before Senate Judiciary Committee to assure senators that the new entity will not stifle competition on the Internet. Case and Levin appear before Senate Commerce Committee two days later to respond to further questions on the proposed merger.

April 26: Coalition of consumer and media groups announces opposition to AOL-Time Warner merger.

June 20: The European Union announces its own in-depth probe of the proposed merger.

June 23: Shareholders of AOL and Time Warner vote to combine the companies.

July 27: Federal Communications Commission Chairman William E. Kennard indicates his agency plans its own review of the merger.

Sept. 21: AOL and Time Warner submit concessions to the EU in an attempt to ease competitive concerns.

Oct. 12: EU approves AOL-Time Warner merger after blocking Time Warner’s merger with music giant EMI. AOL and Time Warner also agree to scale back their European operations.

October,2000: Federal Trade Commission lawyers prepare to block the merger in court if negotiations break down.

Nov. 20,2000: Time Warner and EarthLink, the nation’s No. 2 Internet service provider, strike a deal giving EarthLink access to Time Warner’s high-speed cable lines.

Dec. 14,2000: The FTC approves the AOL-Time Warner merger.

January 11,2001(Date of actual completion of merger): The FCC approves the merger. AOL Time Warner was created through a merger of America Online, Inc., and Time Warner Inc. which closed on January 11, 2001.

Stock market history of merged companies

America Online became a publicly traded company on March 19, 1992, at an original price of $11.50 under the symbol AMER on Nasdaq. Adjusting for stock splits, this is an IPO price of $0.09.

Time Inc. merged with Warner Communications, Inc., on January 10, 1990, to form Time Warner Inc. Time Warner common stock traded on the New York Stock Exchange under the symbol TWX. Time Inc. was incorporated on November 28, 1922 in the state of New York. Trading of its common stock on the New York Stock Exchange began on April 29, 1964, under the symbol TL (which was the predecessor stock to TWX). Prior to that date, the common stock was traded over the counter.

Board of Directors:

• Stephen M. Case Chairman of the Board,AOL Time Warner Inc.

• Gerald M. Levin Chief Executive Officer,AOL Time Warner Inc.

• Richard D. ParsonsCo-Chief Operating Officer,AOL Time Warner Inc.

• Robert W. PittmanCo-Chief Operating Officer,AOL Time Warner Inc.

• R.E. "Ted" TurnerVice Chairman and Senior Advisor,AOL Time Warner Inc.

• Kenneth J. NovackVice Chairman,AOL Time Warner Inc.

• Daniel F. AkersonChairman and CEO,XO Communications Inc.

• James L. BarksdalePartner,The Barksdale Group

• Stephen F. Bollenbach President and CEO,Hilton Hotels Corporation

• Frank J. CaufieldPartner,Kleiner Perkins Caufield & Byers

• Miles R. Gilburne Partner,CGLS Fund

• Ambassador Carla A. Hills Chairman and CEO,Hills & Company,and former United StatesTrade Representative

• Reuben MarkChairman and CEO,Colgate-Palmolive Company

• Michael A. MilesFormer Chairman and CEO,Philip Morris Companies Inc.

• Franklin D. RainesChairman and CEO,Fannie Mae

• Francis T. Vincent, Jr. Chairman,Vincent Enterprises

Management Team:

Stephen M. CaseChairman of the Board

Gerald M. LevinChief Executive Officer

Richard D. ParsonsCo-Chief Operating Officer

Robert W. PittmanCo-Chief Operating Officer

R. E. "Ted" TurnerVice Chairman and Senior Advisor

Kenneth J. NovackVice Chairman

Paul T. CappuccioExecutive Vice President, General Counsel and Secretary

David M. ColburnExecutive Vice President and President of Business Development

Dolf DiBiasioExecutive Vice President, Strategy and Investments

Patricia Fili-Krushel Executive Vice President,Administration

Robert M. KimmittExecutive Vice President, Global and Strategic Policy

Kenneth B. LererExecutive Vice President

Wayne H. PaceExecutive Vice President and Chief Financial Officer

William J. RaduchelExecutive Vice President and Chief Technology Officer

Mayo Stuntz, Jr.Executive Vice President

Edward I. AdlerSenior Vice President,Corporate Communications

Myer BerlowPresident, Global Marketing Solutions

Susan BrophySenior Vice President, Domestic Policy

Kathy BushkinSenior Vice President and President, AOL Time Warner Foundation

Marshall CohenSenior Vice President

Richard E. HanlonSenior Vice President,Investor Relations

Spencer B. HaysSenior Vice President andDeputy General Counsel

John A. LaBarcaSenior Vice President,Financial Operations

Lennert J. LeaderPresident, Venture Group,AOL Time Warner Investments

Robert D. MarcusSenior Vice President

Frederick C. YeagerSenior Vice President, Finance


This term paper is intended to demonstrate the key benefits and potential problems that have developed as a result of the merger. In this report attempts are made to explore the operating, financing, and tax synergies that the overall merger of AOL & Time Warner had planned to achieve and has got. In an effort to recognize and implement potential possible strategies, which can be adopted, this term paper includes offered suggestions from various consultants as to how the local AOL Time Warner can utilize its resources most efficiently.

The primary benefit of the AOL Time Warner merger is the accessibility of AOL’s customers to Time Warner and vice versa. This mutually beneficial relationship encourages each company to market its extensive product and service mixes to the other’s customers. AOL Time Warner will also be able to bundle the products and services together to entice customers into purchasing AOL Time Warner’s version of ones they might already have. Once the customers switch to AOL Time Warner’s products and services, it hopes that the customers will have a sense of brand loyalty for its products.

Other important benefits both internationally, nationally and locally include the following:

·Revenues are projected to rise

·Facilitate creative thinking by combining the conservative nature of Time Warner with AOL’s innovation.

·One stop shopping

·International business will account for over one third of revenues

·Improved management and corporate culture

·Technological advances

Although AOL Time Warner benefits from the merger, there are also a number of potential problems. It must be aware of these problems in order to anticipate what it could do to prevent the problems from occurring. AOL Time Warner management will be able to develop strategies and solutions that will ensure future success and avoid potential problems.

Why merger?

Recently, the more prominent companies in Corporate America have been established as a result of the combination of two separate entities. Often, the companies have similar product and service lines, but more and more one can see a movement into mergers of companies from different industries.

Mergers provide many benefits for the consumer as well as the company, but present obstacles along the way. Unsuccessful mergers are common because of the drawbacks; in fact, approximately 66 percent of mergers are unsuccessful. However, the AOL Time Warner merger is going to within the 40 percent that do succeed because of the unique combination of assets. "No other Internet company has AOL’s exposure and subscription fees, and no other media company has Time Warner’s combination of magazines, TV production, and cable network assets."

In comparison to the national scope, to fully realize the benefits for Athens, Ohio, management must first understand how this merger is going to affect the overall telecommunications and entertainment industries. The management will explore the operating, financing, and tax synergies that have exploded as a result of this merger. Then, this will investigate the benefits of these same synergies, as they are applicable to the Athens area. This report will demonstrate the benefits to consumers and the company, what obstacles they might encounter, and how AOL Time Warner will overcome these obstacles nationally and locally.


The AOL Time Warner merger presented a number of different entertainment mediums. Upon doing so, the newly merged company had many industries that were blending together. These industries include but are not limited to the following: broadband, cable modem, net access, digital cable television, and Internet online music. In order to obtain a competitive advantage in each of the aforementioned industries, AOL Time Warner must be aware of how efficiently it is operating.

The broadband industry is currently striving as it makes new steps in providing numerous services such as e-commerce, distance education and training, entertainment, and real time game playing, etc. Joe Lazlo, an analyst at Jupiter Communications, said, " We believe that the AOL Time Warner merger will have a defining impact on the growth of broadband services and will shape consumers alternatives for gaining access to online information and entertainment". Their services are provided through cable modems, DSL, wireless and other recently developed technologies. According to analysts, the broadband market is going to consist of approximately 18 million households by 2003, which accounts for about 28 percent of the country’s online households.

Cable modems are becoming increasingly popular due to the high-speed connection and constant accessibility that it offers. In other words, there is no dial up necessary to get onto the Internet. Analysts project the market will reach $1.2 billion in 2005 with approximately 30 million subscribers. However, cable access is slightly more expensive than other forms of access, thus leading to a majority of consumers that are hesitant to pay the extra costs. For example, there are four cable modem customers for every one DSL customer. The services provided by cable modems are expected to consume a major share of the consumer subscriber market. In areas where cable and DSL have less of a foothold, wireless and satellite are expected to thrive.

Another area of concern for AOL Time Warner will be digital cable services. At the moment, a limited number of companies exist who are providing a majority of this service in the United States. Included in this list are some of AOL Time Warner’s major competitors such as AT&T and Comcast. As this industry continues to grow, the recently merged company will be forced to find different ways to compete so that AOL Time Warner can maintain its competitive advantage.

Digital music must also be considered during an industry analysis. Within this market there appears to be a great deal of growth for the future. According to analysts, annual average online music sales in the United States are expected to reach $75 per buyer by 2003, while the global market for online music sales will rise to $6.7 billion.


Although AOL Time Warner is a leader in the industry, it continues to face fierce competition from other companies. With America Online boasting over 27 million members and Time Warner with roughly 13 million subscribers, both companies have become models for competing in the telecommunications and entertainment industries. Companies like AT&T and other digital subscriber lines (DSL) offer customers Internet Service Providers similar to AOL.

Competing in the entertainment sector are companies like Disney, Viacom, Fox, Sony and Universal Studios. Among the many competitors in the telecommunications industry were widely known names such as Yahoo, MSN, and AT&T (See Appendix C.) This intense competition will require that AOL Time Warner remains focused on the needs of individual customers in each industry. Many feel that AOL Time Warner will be able to outperform each of these companies because of the content offered.

However, when this merger was originally considered, there was speculation that the company would dominate each of the industries in which it operated. To avoid this, the Federal Trade Commission (FTC) set up guidelines that AOL Time Warner must uphold; otherwise it will face legal sanctions. The Federal Communications Commission (FCC) is responsible for ensuring that the stipulations established by the FTC are upheld by AOL Time Warner.

Broad Scope of AOL Time Warner Merger

Operating Synergies

International Factors

The merger will give AOL Time Warner a competitive advantage globally, allowing it to expand its businesses and brands to international markets. In the next five years, AOL Time Warner plans to acquire more than one-third of its revenue from international outlets. With potential expansion, AOL Time Warner will become a stronger corporation, increasing revenue and recognition around the world.

AOL Time Warner has also agreed to abide by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The safe harbor provisions were adopted after the European Union presented the issue of the abuse of a customer’s personal information. This included solicitation over the Internet and even the exchange of personal information between companies in countries that did not abide by the safe harbor principles.

The primary drawbacks concerning international expansion are the government regulations of individual countries. Since Europe has a united regulatory body, the European Union, any company that plans to have European operations, the EU must also investigate the possible anti-trust. Even if the US government approves the merger, the EU does not necessarily have to agree with the same decision.

Another concern is the marketability of Time Warner’s products in foreign countries. The access provided by AOL is easily marketable to foreign customers because of the ease of use. If AOL can continue to keep its prices competitive, even in the foreign market, then the ISP service should continue to be successful. A potential problem lies within the content provided by the Time Warner portion of the merger. If foreign customers find that music, magazines, and films are too specific to the American culture, then a different strategy needs to be implemented. AOL Time Warner does has the option to purchase international magazine and film companies, but increasing its size will put AOL Time Warner more at risk for being scrutinized as a monopoly.


With the marriage of two mega-media companies, management has many challenges to face. The integration of two separate companies, including their employees, their core values, and their corporate cultures, is a difficult task. In hopes to avoid cultural conflicts, AOL Time Warner has appointed a transition team. This team, headed by AOL CEO Bob Pittman, works on merging the internal structures and cultures of the two separate companies into one. Finally, the team will also be responsible for restructuring the companies’ operations and future services.

If the transition team does not function effectively, AOL Time Warner may not have the potential to succeed. If the inner values instilled in the employees from the individual companies differ, there will be no harmony among them, which could result in a lack of efficiency. This could cause the company’s position in the marketplace to decline, and ultimately terminate its existence.

The senior management had to quickly make necessary changes. A factor benefiting the transition is that few overlapping jobs exist. In order to adapt, employees will need to be aware of the new goals and visions of AOL Time Warner. It will be necessary for upper-level management to implement them rapidly in the daily work of the employees so that they may adjust to handle the company’s new growth.

It will not be necessary initially for senior management to cut thousands of employees to bring together the two companies. Some termination of employment and relocation will occur, but the companies prefer to avoid removing experienced, quality employees. Offering early retirement for employees who have been with either company for an extended period of time has been an option. According to Mary Mosquera’s article, AOL Time Warner Merges Staff with Unemployment, the majority of the job cuts resulted from combining website operations and information technology systems. The job eliminations totaled about 3 percent of the entire workforce.


Prior to the merger, AOL had approximately 1,200 employees and had a strong commitment to each of them. The employees worked under favorable conditions, encouraged by the management, to excel and maintain AOL’s status as a number one competitor. Upper level management worked toward employee satisfaction by providing conveniences such as a casual environment and dry-cleaning. AOL’s treatment of its employees differed from Time Warner’s because of the smaller number of employees and less regimented work environment. Time Warner was unable to provide the personalized benefits due to the conservative nature of the company.

The merged company will be dealing with 85,000 employees, therefore AOL’s former treatment of employees will be difficult to provide. AOL Time Warner will have to evaluate extensively how the differing treatment of employees will affect the environment it’s attempting to create.

AOL Time Warner plans to transfer its employee compensation from cash to equity by declaring plans for a stock-option grant to employees. "The compensation philosophy of the company is shifting from that of a traditional media company -- cash salary and bonus based on divisional performance -- to that of a technology company," said Henry Blodget, a Merrill Lynch Internet analyst. AOL Time Warner wants to use this new philosophy to encourage a sense of ownership for employees in the company with hopes to increase productivity.

Cross Promotion

With the merger of an Internet media giant, AOL and cable giant Time Warner cross promotion opportunities look to be infinite. The number of potential customers for AOL Time Warner has greatly increased as well as distribution channels, customer, and cross-promotion reaches the far ends of media spectrum. The newly merged company’s Advertising Council will make those opportunities into realities. With members like Jed Petrick, executive vice president of media sales for Warner Bros.; Paul McNicol, senior vice president of interactive marketing, AOL; and others, potential strategies for cross promotion have been developed during monthly meetings. Some advertiser executives yearn for every cross platform deal to be a custom proposal; however, this is contrary to some who feel the need for cross-media templates.

AOL Time Warner can now directly advertise, sell, and distribute its products on the Internet (See Appendix A for a list of products and services.). AOL will have access to Time Warner’s cable lines to develop itself in marketing and service areas. Thus, AOL will provide faster service to customers remaining competitive as an Internet service provider. Most importantly, AOL and Time Warner will gain access to one another’s extensive customer lists.

Despite some conflicts of interest amongst the advertising executives, the key to promoting the new company will be combining content, platform delivery, and marketing this content across all mediums available as a result of this merger. For instance, AOL software CDs will be stuffed in print publications of Time Warner’s Money. Time Warner films and music artists will be referenced throughout AOL’s Internet site and more heavily through AOL’s dial-up service. Finally, consumers will be able to buy their AOL service, renew magazine subscriptions, and pay for cable service in one bill.

Financing Synergies

The present valuation equations determine the company’s financial stability. (See Appendix B for all mathematical equations.)After a merger, the determination of the present valuation is necessary to evaluate how beneficial the merger will be to the combined companies. Specifically for the AOL Time Warner merger, CFO J. Michael Kelly of the newly merged company estimates, "Cash flow will grow an eye-popping 50% annually".

AOL Time Warner has three main options in order to increase the present valuation of the company:

1.Increase total cash flows

2.Decrease interest on debt and equity

3.Realize cash flow benefits more quickly.

In order for AOL Time Warner to increase the total cash flow, it must identify its core competencies. Once they have been identified, the portions of the merged company that do not match the core competencies can be sold off through a process called divestiture. Divestiture can be defined as the sale, liquidation, or spinoff of a corporate division or subsidiary. The cash earned from the sale of the division directly increases the cash flow of the company. This, in turn, increases the present valuation of the merged company as determined by the mathematical equation.

A company like AOL Time Warner also has the option of decreasing interest on debt and equity to increase the overall present valuation of the company. Since interest on debt is less expensive to a company than equity, AOL Time Warner should attempt to utilize the most cost effective strategy. The interest on debt is less expensive because interest on a loan is tax deductible. Using the company interest rate equation after taxes, the company deducts the percentage of interest that is tax deductible to determine the overall tax rate on debts.

The other method AOL Time Warner could implement, although not the most cost effective, is to reduce the interest rate on equity. The paid return on equity is determined by the security market equation. This equation factors in the amount of risk undertaken by a company in addition to various market conditions. Since investors typically expect some type of return on investments in the form of dividends, AOL Time Warner is obligated to distribute these funds. The monies distributed to the shareholders are not tax deductible; therefore, the rate at which they distribute dividends is the final rate.

AOL Time Warner can also realize the cash flow benefits sooner than they would have as separate companies. For example, Time Warner had a project prior to the merger where the profits were intended to be realized in ten years. Because of the accessibility AOL has to an Internet audience, the merged AOL Time Warner will be able to reap the profits from that project sooner. The increase in cash from revenues will allow the cash flow for the merged company to be realized by AOL Time Warner sooner then expected.


When a merger occurs it is not unusual for the stock price of the business acquiring another company to decrease, and the stock of the company being acquired to increase. Fortunately, this typical circumstance did not happen between AOL and Time Warner. Time Warner’s stock was at $52 per share as of January 1, 2001. By January 11, 2001, the day of the merger, the stock price shot up to $71 per share. This was about a $20 per share increase within 11 days. AOL’s stock prices increased also. The price went from $39 on January 1, 2001 to $47 per share on the day of the merger. This is an approximate increase of eight dollars per share. The typical stock drop did not occur, which shows a positive outlook for AOL Time Warner’s future.

Financial History

America Online’s revenues have increased dramatically from $2,600 million in 1998 to $6,886 million in 2000. They generate most of their revenues through membership and usage fees, which accounted for 64% of sales in 2000. A good portion of revenues, 29%, also comes from advertising and commerce. AOL’s net income has steadily increased from $92 million in 1998 to $1,232 million in 2000 as well. Additionally, their total cash flow has been rising. It went from $224 million in 1998 to an amazing $1,595 million in 2000.

When looking at Time Warner’s financial history one can see a significant increase in revenues. They doubled by going from $14,582 million in 1998 to $27,333 million in 1999. Time Warner’s 2000 revenues were not available, but they were expected to increase 8 percent. The company’s net income from 1998 to 1999 rose dramatically from $168 million to $1.960 million. Additionally, cash flows rose from $806 million to $4,437 in 1998 and 1999 respectively. Time Warner’s net income and cash flows for 2000 were also not accessible.

Considerable increases in the above numbers are due to Time Warner’s decision to consolidate the income statement and balance sheet items with Time Warner Entertainment Co. for financial reporting purposes. Time Warner, including, Time Warner Entertainment, is one of the largest U.S. operators of cable television systems, and is one of five companies that dominate the worldwide market for recorded music.

Pro Forma Financials

On January 11, 2001 America Online acquired media giant Time Warner in a transaction valued at over $106 billion. Pro Forma financials have been released as if the merger had actually occurred on January 1,1999. These results reflect reclassifications of each company’s historical financials to conform to the company’s combined Pro Forma financial statement. Pro Forma revenues for 1999 equal $32,525 million, total earnings before interest, taxes, depreciation and amortization (EBITDA) is $8,175 million, and total net income is a loss of $2,446 million. When looking at Pro Forma results for 2000 total revenues are $36,213 million, EBITDA equals $8,267 million, and there is a net loss of $4,384 million (, 2001).

These Pro Forma financial statements show some astounding results. Revenues have shot up to the $35 billion range. Previously, AOL and Time Warner were making only approximately $6 billion and $27 billion, respectively, as individual companies. Unfortunately, both years show a loss in net income. However, since this is a new merger, it is not unusual for it to take time for AOL Time Warner to establish itself as a new company.

The goal of the newly created company, AOL Time Warner, is to become the world’s most valuable and respected company. After reading what the company’s new CFO, J. Michael Kelly, has to predict about future revenues and cash flows, one can see why the previous statement is true. Kelly predicts $40 billion in revenue for AOL Time Warner in 2001, which should grow by 12 percent to 15 percent. He also forecasts $11 billion in EBITDA, which is projected to grow 25 percent annually.

Tax Synergies

Despite all the scrutiny from the US government regarding anti-trust regulations, AOL Time Warner will actually receive numerous benefits from the government concerning annual tax breaks. Since AOL and Time Warner are uniting as one entity, it will be taxed as one company. Even if the tax percentage rate is, for some reason, significantly higher, it is guaranteed to be less then the combined taxation of the separate entities.

Streamlining the responsibilities of its employees is also a critical factor concerning the taxation benefits. Even though AOL Time Warner has only decreased its total workforce by approximately 3 percent, it saves them federal, state, and local tax monies spent on each employee. The federal government also requires that employers pay into workman’s compensation and unemployment funds for each employee. By developing an efficient system to operate the newly merged company, AOL Time Warner is able to save more money than the weekly wages of terminated employees.

Local Scope in the City of Athens, Ohio

Although the overall scope of the AOL Time Warner merger is important, it is also equally as important to analyze the effects from a local perspective. Just as benefits of the merger are present on the national and international levels, benefits will also be present in the city of Athens. Fortunately, for the city of Athens, the majority of products and services offered in the area have already been sampled in other communities. This will allow the customers to experience the full benefits from products offered in the area because AOL Time Warner will experience fewer technical difficulties.

Operating Synergies

Cross Promotion

Cross promotion will also benefit AOL Time Warner customers in the Athens city area. Time Warner Cable has a cable franchise ordinance for providing cable to the city. Its current users will be likely to sign up for AOL cable Internet access, which will be provided in the future through the Time Warner cables. In a recent survey of Athens city residents, a trend can be seen demonstrating the demand for these types of services. Over 60 percent of the surveyed population stated that they would be willing to increase monthly bills for faster Internet access and pay more for additional television channels.

When 416 residents were surveyed, 317 said they would be interested in paying one monthly bill to cover both cable and Internet service. AOL Time Warner can bundle products and services together offering special prices. This type of promotional activity encourages customers to try new products and services that they would not typically purchase. AOL Time Warner believes that the customers will be pleased with the products and services so much that they continue to subscribe.

Demands Of Increased Accounts

As AOL Time Warner develops its merger in Athens, one aspect of the business it must consider is whether AOL Time Warner will be able to handle the increased customer demand. In the past, AOL has had issues with customer satisfaction in regards to people actually being able to sign on, remain on, and download things at an efficient rate. Hopefully, AOL Time Warner will have the capabilities to manage the peak load problems, which can be defined as a disruption in the transfer of information at times during the day when usage is higher than normal.

Upon arriving in Athens, AOL Time Warner will have a strong customer base with the number of students and faculty affiliated with Ohio University, not to mention the actual residents of the city. After recognizing the potential accounts in the area, will AOL Time Warner be able to perform efficiently? Since it has been forced to revamp its methods in the past to ensure customer satisfaction, one could assume that AOL Time Warner will be able to work out any complications that may exist in order to maintain customer satisfaction.

Cable Franchise Ordinance

A distinct benefit of the AOL Time Warner merger is the acceptance of franchise monopolies in the cable television industry. A cable franchise ordinance is the exclusive authority of a company to provide service in a predetermined geographical area. Under this type of structure, the customers in the geographical area do not have the option as to which carrier will provide them with cable service. Time Warner, in the Athens area, has been given permission by the Athens City Council to provide cable services in the Athens city area.

Although a provision of the merger document approved by the FTC states that the AOL Time Warner cables must be accessible to at least three other ISPs, Time Warner still has the sole right to the cable television revenues.

Potential Customers

Through the increased distribution channels that AOL Time Warner cables provide in the Athens city area, the number of potential customers has risen. Customers, especially those subscribing to AOL, can take full advantage of the cable access. AOL Time Warner can provide its customers with everything from cable television to Internet access and movies to magazine subscriptions. Whether Ohio University college students are watching television, conducting research, chatting online, or just surfing the Internet, they present a major source of revenue for the local AOL Time Warner business.

Likewise, being a college-town, Athens city is densely populated with young adults in the age range of 18yrs-25yrs.During the 2000-2001 academic school year, there are 12,296 off campus students affiliated with the University, according to the Office of Institutional Research at Ohio University, (2000) Each of these students has academic requirements that tend to involve Internet research. Since the market is comprised of many college students, they might be more willing to accept and try upcoming and developing technologies. From this observation, AOL Time Warner has numerous potential customers coming solely from the university, not including faculty, staff, and other Athens city residents.

Financing Synergies

Considering the increased promotional attempts made by AOL Time Warner, the Athens area should reap the monetary benefits through an increase in the total number of accounts. Since customers will be able to receive cable television, Internet access, and magazine subscriptions from the same company, many busy college students, professors, Ohio University employees, and Athens city residents will be encouraged to take advantage of this opportunity.

The demand for the increase in the number of accounts in the Athens city area will require AOL Time Warner in Athens to maintain a reliable workforce to ensure total customer satisfaction in the area. AOL Time Warner will require each of its employees to read, understand, and sign an employee agreement, which will protect both the employer and the employee. The employer will be ensured that any intellectual property and company secrets are not inappropriately used. The employee is guaranteed to receive an annual salary, quoted in the document, along with any other employee benefits available to him/her.

Current Market Performance (Ratio based) after merger

AOL-Time Warner, Inc. (NYSE) Sector: Technology Industry: Computer ServicesRATIO COMPARISON

Valuation Ratios Company Industry Sector S&P 500

P/E Ratio (TTM) NM34.17 46.75 30.52

P/E High - Last 5 Yrs. NA65.02 69.23 51.08

P/E Low - Last 5 Yrs. NA16.99 18.55 17.49

Beta 2.47 1.77 1.82 1.00

Price to Sales (TTM) 3.52 3.84 6.32 3.81

Price to Book (MRQ) 0.85 3.80 5.90 5.52

Price to Tangible Book (MRQ) NM15.06 7.64 8.77

Price to Cash Flow (TTM)18.19 19.76 40.72 22.98

Price to Free Cash Flow (TTM) 45.51 39.36 36.42 36.74

% Owned Institutions 59.00 39.13 43.71 59.57

Dividends Company Industry Sector S&P 500

Dividend Yield 0.00 0.49 0.66 1.76

Dividend Yield - 5 Year Avg. 0.00 0.17 0.20 1.24

Dividend 5 Year Growth Rate NM4.52 -24.79 5.76

Payout Ratio (TTM) 0.00 2.96 8.41 27.93

Growth Rates(%) Company Industry Sector S&P 500

Sales (MRQ) vs Qtr. 1 Yr. Ago 379.18 12.25 -11.64 0.22

Sales (TTM) vs TTM 1 Yr. Ago 353.63 16.79 2.05 6.35

Sales - 5 Yr. Growth Rate47.75 33.07 26.50 14.87

EPS (MRQ) vs Qtr. 1 Yr. Ago NM-15.77 -28.03 -7.13

EPS (TTM) vs TTM 1 Yr. Ago NA7.98 -37.00 -4.12

EPS - 5 Yr. Growth Rate 92.21 54.36 21.64 15.37

Capital Spending - 5 Yr. Growth Rate 47.85 30.97 -0.17 5.54

Financial Strength Company Industry Sector S&P 500

Quick Ratio (MRQ) 0.55 1.26 2.41 1.17

Current Ratio (MRQ) 0.83 1.52 2.95 1.69

LT Debt to Equity (MRQ)0.13 0.31 0.22 0.69

Total Debt to Equity (MRQ) 0.14 0.35 0.29 0.98

Interest Coverage (TTM) NM7.40 12.42 9.66

Profitability Ratios (%) Company Industry Sector S&P 500

Gross Margin (TTM) 46.70 43.55 49.92 47.81

Gross Margin - 5 Yr. Avg.46.49 42.82 53.19 48.58

EBITD Margin (TTM) 20.74 17.56 13.16 19.84

EBITD - 5 Yr. Avg. 6.38 11.10 21.02 22.23

Operating Margin (TTM) 4.48 6.36 7.82 15.68

Operating Margin - 5 Yr. Avg. 5.43 4.53 15.30 18.25

Pre-Tax Margin (TTM) -4.00 3.02 9.19 13.67

Management Effectiveness (%) Company Industry Sector S&P 500

Return On Assets (TTM) -1.75 0.17 1.49 5.81

Return On Assets - 5 Yr. Avg. -2.85 -0.55 9.57 8.20

Return On Investment (TTM) -1.87 2.71 3.17 9.41

Return On Investment - 5 Yr. Avg. -9.60 -0.67 14.50 13.08

Return On Equity (TTM) -2.39 4.49 5.10 16.46

Return On Equity - 5 Yr. Avg. -16.29 0.72 19.05 21.96

Efficiency Company Industry Sector S&P 500

Revenue/Employee (TTM)376,949 281,033 364,254 597,212

Net Income/Employee (TTM) NM19,346 49,316 89,984

Receivable Turnover (TTM) 10.03 8.07 6.41 9.01

Inventory Turnover (TTM) 16.97 19.20 11.33 10.46

Asset Turnover (TTM) 0.26 0.63 0.75 0.96

Five Years Stock Price Movement

AOL-TimeWarner (NYSE:AOL)

Splits: 25-Nov-94 [2:1] 28-Apr-95 [2:1], 29-Nov-95 [2:1], 17-Mar-98 [2:1], 18-Nov-98 [2:1], 23-Feb-99 [2:1], 23-Nov-99 [2:1]

Last TradeJan 25 · 27.48 Change-0.54 (-1.93%) Prev Cls28.02 Volume22,298,000 Div DateNov 22, 1999

Day's Range27.00 - 28.44 BidN/A AskN/A Open27.95Avg Vol20,246,680 Ex-DivNov 23, 1999

52-week Range27.0000 - 58.5100Earn/Shr0.42 P/E67.36 Mkt Cap121.6B Div/ShrN/A YieldN/A


Despite the school of thought that believes that mergers of two large companies is virtually impossible to make a success, AOL Time Warner will soon be able to overcome that stigma. AOL Time Warner has invested a lot of time, money, intellectual capital, human capital, and effort in order to ensure that the cultural and technical components of the merger survive. To demonstrate the philosophies shared by AOL Time Warner, Mr. Steve Case, the new Chairman of the board states:

"We’ve always said that America Online’s mission is to make the Internet as central to people’s lives as the telephone and television, and even more valuable, and this is a once in a lifetime opportunity to turn this promise into a reality...By joining forces with Time Warner, we will fundamentally change the way people get information, communicate with others, buy products and are entertained—providing far-reaching benefits to our customers and shareholders."

Impact on AOL and Time Warner

The planned merger resolves some significant problems for AOL, which had a terrible broadband offering, with no clear strategy or partner. Before the Time Warner deal, AOL's main broadband strategy can be summed up in one word: whining. Most of its energy has been focused on legal and regulatory actions to get AT&T to open its local cable networks.

Despite its positives, the AOL Time Warner merger is NOT evidence that an Internet company can instantly port traditional media content, news and information to the Internet. That question will be answered over time, and the hurdles — culture clashes, integration of traditional content with Internet delivery, open access issues, management of the merged entity — will be significant.

AOL Time Warner is an unfinished work of art. This transaction represents the foundation upon which the company will grow its consumer-centric business. We expect that AOL Time Warner will look for additional acquisition opportunities, including facilities-based DSL ISPs and international properties.

Impact on AT&T

AOL Time Warner changes the equation for AT&T, the largest CATV infrastructure owner in the U.S. via its acquisitions of TCI and MediaOne. AT&T also has a JV with Time Warner and that's an interesting partnership because even as AT&T subsidizes Time Warner's infrastructure buildout, AOL sneaks in as the bundled ISP with Time Warner's RoadRunner cable service. AT&T must figure out how to deal with Time Warner as a threat and not as a partner anymore, or at least as BOTH a threat AND a partner.

Impact on other competitors

AOL Time Warner doesn't represent the FIRST merger between a major media company and a consumer Internet services company because that's what Disney's GO and MSN-NBC were all about. Regardless, AOL Time Warner is significant because of its size and scope, as well as its focus on consumer markets. We expect that the merger will light the fire for additional media-Internet mergers.

Most of the other IXCs, including MCI WorldCom, are now TWO steps behind: not only are they scrambling for consumer broadband access, they're also without compelling content. It's hard to argue with Bugs Bunny.

After analyzing the immediate balance sheet and cash flow statement analysis just after the merger and after assessing the ratio based current market analysis it can be concluded that merged entity is performing reasonably well in the market. But to survive in the long run it should concentrate towards achieving the synergies for which this merger is intended to.



When AOL Time Warner merged it was confronted with many more competitors in a variety of industries. Among these competitors were large production companies offering:

§A similar product line to the pre-merged Time Warner,

§An assortment of Internet Service Providers,

§And wireless phone providers.

Although AOL Time Warner is now much larger than the majority of these companies, it must be aware of the strict competition competitors will provide. It must also be willing to make the necessary advances to maintain its competitive advantage.


Viacom like AOL Time Warner operates in many mediums, from movies and television to publishing and the Internet. Included in their product mix are Blockbuster, CBS, MTV, radio stations, cable networks, theme parks, and publishing companies. Currently, Viacom is lacking a strong Internet presence. Recently, they have been increasing online business, but unfortunately they did not meet the performance goals previously anticipated. According to Mel Karmazin, the acquisition of an Internet company will improve Viacom’s stock. He claims that if it is a possibility, then he will make it a reality, but only after careful consideration.


Disney is one of the biggest names in the entertainment field. They are the third largest media and entertainment conglomerate in the world behind AOL Time Warner and Viacom. Operations include movies, broadcasting, the Internet, and theme parks. At the moment, they have a strong advantage because of the content they provide in the New Media world. They also have decades of experience in cross selling; utilizing its theme parks, cable TV, and networks to promote its films. Disney is having difficulties developing a broadband strategy, making it more difficult to gain a definite advantage over AOL Time Warner.

AT&T Wireless

With the joining of AT&T and MediaOne Group, the company has become one of the largest cable operators in the United States. They have connections with more than 25 percent of the country’s cable customers. The AOL Time Warner merger could encourage AT&T to join with other content companies. AT&T doesn’t have a lot of Internet access, since the WorldNet is only a fraction of the size of AOL. In order to remain a competitor to AOL Time Warner, they are most likely going to have to take a look at alliances that will provide more content to the company. According to telecom analyst Brian Adamik, "The content distribution model is very powerful. It will cause telecom companies to wonder if owning a pipe alone is enough."

AT&T Broadband offers a variety of services in the telecommunications industry. Competing with AOL Time Warner, they provide basic and premium cable services, roadrunner Internet access, digital cable and digital music.


Frognet is an Internet provider that offers full service and a multimedia development firm focusing on e-commerce for the World Wide Web. They act as an Internet Service Provider and are widely used in the Athens area.


Yahoo! has the advantage of being the largest portal on the Web, attracting 120 million visitors a month. It has a $94 billion plus market cap that gives them tremendous buying power. Yahoo! is looking to continue its current strong relationships with content providers as opposed to buying a content company. If Yahoo! continues to pursue this strategy, it may be left behind. In addition, it does not currently offer Internet access services and, therefore, cannot directly compete with AOL as an ISP.

Yahoo! is expecting revenues of $1.2 billion in 2001, however the company feels that there are some potential risks that they will be facing. These risks and uncertainties include:

· A slower spending environment for advertising sales

· Actual increases in demands by customers for Yahoo!’s services

· The ability to successfully change the customer mix among Yahoo!’s advertising consumers

· Dependence on third parties for technology, content, and distribution.


Verizon mainly competes with AOL Time Warner through their DSL Internet connection services and Verizon online. Their DSL services provide customers with the ability to access the Internet at a fast rate and remain online until the computer is shut off. Verizon’s DSL service is one that is dedicated to providing a local connection between the individual customer and the Verizon serving office; in other words, the DSL connection is not shared with other neighboring customers. Verizon also offers a wireless mobile web service that provides the wireless carrier the access to a personalized website directly from their handset.

Recently, Verizon started its own online service that allows customers fast connections to the Internet with fewer busy signals and local access in most areas. Once on the Internet a service known as one-click web channels is provided, making navigating the web easier and more efficient. The Verizon online service is comparable to that of AOL and is approximately $7 less. Operating under high standards, Verizon online,is rated as performing above the industry by Inverse Network Technology, an independent firm that measures the overall performance of ISP’s.


MSN, another competitor of AOL Time Warner, acts as an ISP and an ASP. They offer a full service package including: high speed DSL and access to the Internet that is always accessible. Since the line is not shared, MSN is able to guarantee a dedicated bandwidth connection, meaning the speed will not be reduced during peak usage.

MSN provides high-speed satellite access for those customers who are unable to utilize DSL. Through satellite service, content can be sent and received over satellite without phone lines. Services are not lessened with the use of the satellite; rather, the same features provided through dial-up connections, along with many more, are available.

Core com/Eurekanet

By transforming a copper phone line into a broadband pipe, CoreComm DSL, a local competitor of AOL Time Warner, can deliver download speeds 27 times faster than standard dial-up speeds. They offer Internet access that is always available, with no delays or busy signals. CoreComm DSL includes services such as: a DSL line with constant connection, ADSL, choice of connection speed, and 3 email accounts, to name a few.

Internet Providers in Athens Services Prices

AOL Time WarnerRoad RunnerISP $39.95/month$24.95/month

Frognet 56k Dial-upADSL$19.95/month$19.95/month

Eurekanet 56k Dial-up $19.95/month

MSN 56k Dial-upDSLSatellite $21.95/month$39.95/month$59.95/month

Verizon DSLOnline$39.95/month$19.95/month


Financial Equations

Capital Strucure

Assets =Liabilities + Equity

Present Valuation

P0= __CF1___ + ___CF2___+.........___CF¥___

(1+i)1 (1+i)2 (1+i)¥

Company Tax Rate After Taxes

Tax rate after taxes= Kd* (1-T)

Security Market Line Equation

ks=krf+(km – krf)b


ks= rate of return

krf= risk free rate

km=S&P 500 market

b= Beta


Products and Services

Below is a list of the different products and services that AOL Time Warner provides to consumers. It includes different services such as subscriptions, cable, movies, music, home videos, recorded music, printed music, books, magazines, online shopping programs, kids stuff, and company branded products. Interactive services include networks, online publishing, filmed entertainment, music and the cable system.

AOL 6.0 Internet Service Provider

üServes more than 27 million members worldwide

ü1.2 Million peak simultaneous users

ü166 million e-mails daily

ü245 million stock quotes daily

ü7.3 billion Web URLs served daily

ü64 minutes online per member daily

ü656 million instant message a day

Subscriptions include America Online includes Digital City and MapQuest; the new AOLbyPHONE; the AOL and portals; the Netscape 6, Netscape Navigator and Communicator browsers; AOL Moviefone, the nation's No. 1 movie-listing guide and ticketing service; [email protected], a free online learning tool for K-12 classrooms; and and NullSoft's Winamp, leaders in Internet music. i-Planet E-Commerce Solutions, a Sun-Netscape Alliance, provides easy-to-deploy, comprehensive e-commerce solutions for the Net Economy.

Ø AOL Anywhere provides AOL By Phone, AOL Mobile Services, Instant Messenger on Spring PCS, Wireless Web, AOLTV, Instant AOL, AOL Plus, Handheld Organizers, AOL Mobile Communicator, People & Chat, Search and Privacy Protections.

Ø CompuServe 5.0


Ø AOL Instant Messenger

Ø AOL International provides AOL and CompuServe offering multiple services in 16 countries in 8 languages

·Cable Includes HBO Direct Ordering and Road

·Movies include, New Line Cinema Store, Warner Home Video, Total E, Columbia House, DVD, HBO DVD, Moviefone

·Music Online includes Winamp and Spinner

·Home Videos include Time Life Videos, This Old House videos, This D.A.V.E.(direct audio video express), Warner Bros. Records, Elektra Records Store, Columbia House, New Line Cinema Store, Warner Home Video, Warner Bros. Video Club, Turner Classic Movies, HBO Home Video

·Recorded Music includes Atlantic Records, The D.A.V.E, Elektra Records Store, The Reprise Store, Rhino Records, Warner Bros. Records Music Store, Warner Bros. Studio Store, and Warner Classics International

·Printed Music includes SongXpress, Warner Bros. Publications Music Shop, Warner/Chappell

·Books include Book-of-the-Month Club, Columbia House CD-ROMs, Little, Brown and Company, DC Comics comic books, Oxmoor House Books, Warner Books, Sunset Books, Time 100 Bookstore, Cooking Light Books, Martha Stewart books, Progressive Farmer books, Southern Living books

·Magazines include Asiaweek, BabyTalk, Coastal Living, Cooking Light, Entertainment Weekly, Fortune, Health, Hotdots, Life, Money, Parenting Magazines, People, Progressive Farmer, Southern Living, Southern Accents, Sports Illustrated, Sports Illustrated for Kids, Sunset, Teen People, This Old House, Time, Time for Kids

·Online Shopping includes Columbia House, [email protected], [email protected], Total E

·Kids Stuff includes [email protected] applies America Online's hallmark focus on convenience and ease-of-use to help educators make the most of online learning and provides a series of safe, age-appropriate learning portals with easy-to-follow links to online content selected by educational experts. Also, there is Warner Bros. Studio Store, Sports Illustrated for Kids, DC Comics for Kids, Children’s Book Nook, AcmeCity, HBO Family, Atlanta Braves Merchandise

·Company Branded Products include Comedy Central Store, New Line Cinema Store, Warner Bros. Store, Warner Bros. Studios Facitilities, Coastal Living House Plans, Progressive Farmer General Store, Southern Living Marketplace, Sports Illustrated Merchandise, This Old House Store, Atlanta Braves Merchandise, Atlanta Thrashers Merchandise


·Networks include Turner Entertainment Networks, CNN News Group, Home Box Office and The WB Television Network

·Publishing includes Time Inc. and Time Warner Trade Publishing

·Filmed Entertainment includes Warner Bros. and New Line Cinema

·Music is Warner Music Group

·Cable System is Time Warner Cable


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