Corporate Strategy Case Study

Time Warner: Dick Parson's Dilemma

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Abstract:
Time Warner had interests in publishing, cable systems, filmed entertainment, interactive services and television networks. It owned a collection of brands like America Online (AOL), Time Inc., Home Box Office(HBO), New Line Cinema, Turner Broadcasting System, Warner Bros. Entertainment and Time Warner Cable all under one roof.

In 2000, Time Warner merged with AOL. It was called ‘historic’ as it brought together an online service company and a media and entertainment services provider. With the merger, Time Warner’s stocks went up by 39%, $25.31 to $90.06 in 2000. The deal represented a major change in Time Warner’s approach to become a Net player. But the value of AOL had dropped from its $200 billion high, since its merger with Time Warner. Though AOL was the gateway to the Internet for many Americans through the mid 1990s, of late the rise of high-speed Internet access from telecommunication companies and cable companies had shrunk its user base.

Moreover, Carl Icahn, the billionaire investor who had 3% share in the company had been putting pressure on Time Warner to split the company. He accused the Time Warner board of not taking enough steps to enhance shareholder value.

Pedagogical Objectives:

• To discuss the impact of a single share holder on the entire company
• To discuss the future of Time Warner
• To analyse the growth dilemma faced by Time Warner.

Keywords : Leadership; Carl Icahn; Managing in Troubled Times Case Study; AOL-Time Warner Merger; Media and Entertainment; ISP; Internet Business Dick Parson; Online services; Shareholders value; American Online; Time Warner; Strategy