AOL Time Warner

CNet News reports:

Time Warner said Monday that it will begin offering free America Online accounts to customers of its Road Runner broadband Internet service in an effort to attract new subscribers and garner more advertising dollars.

Imagine that, a multi-pronged company putting its disparate resources together. What a concept! Of course, this was the motivation behind the merger of AOL and Time Warner all along. This announcement is a reminder of just how much that merger failed to live up to its initial promise.

AOL Time Warner has a dismal record of marshalling its resources. What do I mean? Here are a few simple examples.

• AOL acquired the Netscape web browser years ago. Yet, to this day, what browser do they include in their AOL client? Internet Explorer. After all these years, they have not been able to incorporate their own browser into their software.
• For a long time, AOL provided competing cable broadband services. There was AOL Broadband, run by AOL, and Road Runner, run by Time Warner cable. These were in competition with each other, even though they were owned by the same company. And, of course, both were in competition with AOL's dial-up service.
• So-called legal music services sponsored by the music industry was long touted as the salvation of the music industry. MusicNow was a service backed by, among others, Warner Music. How quickly did corporate sibling AOL get that service onto the desktops of its millions of subscribers? Well, we're still waiting.

The whole point of the merger was to put all the multimedia content of Time Warner into the hands of online giant AOL. The idea was that that content, along with Time Warner's cable business would ease AOL dependence on dial-up subscribers and make it the leader in the then emerging broadband world. The vision was of a collection of lucrative subscription services that would combine all of Time Warner's entertainment content (an extensive movie and music library, along with publishing) with AOL's net savvy, whose combined weight would dominate the broadband world. Then AOL president Bob Pittman said at the time of the merger

We will accelerate the development of Time Warner's cable broadband assets by bringing AOL's hallmark ease-of-use to this platform. We expect America Online to help drive the growth of cable broadband audiences, and we will use our combined infrastructure and cross-promotional strengths to enhance the growth and development of both America Online and Time Warner brands around the world.

Yet, this was the singular failure of the merged company. Calling the merger "one of the greatest failed deals in corporate history," CNet describes the AOL Time Warner corporate environment as a "culture of fiefdoms." The merger's architects saw their "grand visions of an Internet-charged media behemoth faded into the bland realities of turf wars and cutthroat politics." The divisions in the company were never able to arrive at a single, coherent strategy. As a result, rather than dominating the broadband world, AOL is still struggling to leave its dial-up roots behind; cable internet is slowly losing ground to DSL services provided by a combination of phone companies and online content providers (who, by the way, have a good track record of packaging their services) at lower cost; the online music business has been taken over by web companies like Apple, Real Networks, and Microsoft while the industry sponsored services have floundered; and the fledgling online movie business is following the same path.

It is a rather sad coda to the whole affair that only now, five years after the merger, is Time Warner's cable internet division beginning to make use of AOL.