In January of 2001, America Online and Time Warner merged to form AOL Time Warner. In the $183 billion merger, AOL Time Warner became the largest merger in history and formed the world's largest media company. Time Warner now owns everything from internet and recording labels to sports teams and magazines. Time Warner owns such companies as Time Warner Book Group, HBO, CNN, TBS, Hanna - Barbera Cartoons, American Express, Weight Watchers, Warner Brothers, Time magazine, Fortune magazine, Atlanta Braves, and the list goes on forever. Currently, Time Warner has two hundred twenty-six holdings around the world (Who Owns What, 2004).

Merging AOL with Time Warner was an attempt at combining new media with old media. The theory was that one media company would own all forms of media. AOL Time Warner would now own books, newspapers, magazines, cable networks, and the new internet media. Information would flow in all directions with the new AOL Time Warner empire. They were trying to create a "mega conglomerate" on which media could be transferred from different mediums of the media without going through different companies. Both companies would be able to advertise their services through each other and offer services complimenting the other. But despite AOL Time Warner's ambitions, American Online reported $54.24 billion quarterly loss in 2003; and the name of the company was changed back to Time Warner (Who Owns What, 2004).

From 2001 to 2003, AOL Time Warner's path to verticle integration was a rocky road. AOL Time Warner bought out all of AT&T's shares in Time Warner Entertainment while AT&T merged with Comcast. AOL Time Warner launched its cable internet service at the same time (Who Owns What, 2004). AOL Time Warner also faced Securities and Exchange Commission investigations in accounting fraud, which ended with a $510 million fine in 2004. America Online agreed to have a monitor for financial operations (Fabrikant, 2004). In 2003, America Online lost 2.2 million internet subscribers (Vise, 2004). The ad market was far weaker than Time Warner's original goal (Who Owns What, 2004).

AOL Time Warner made the decision to change the name back to Time Warner on October 16, 2003. AOL Time Warner's stock symbol was also changed, from AOL to the old TWX symbol. Some analysts suspected this was a move to minimize the significance of the America Online problems (Bland, 2003). Others suggest it was a move to show support for Time Warner and its other subsidiaries (Who Owns What, 2004). CEO Richard Parsons commented by saying the name change was to eliminate confusion between Time Warner, which is the larger corporation, and America Online, a small part of the Time Warner empire (Bland, 2003).

Even though American Online reported losses, Time Warner made a $638 million profit after the name was changed (Vise, 2004). But a year later in 2004, Time Warner began selling off sports teams (Atlanta Hawks, Atlanta Thrashers, and Philips Arena) and Warner Music Group (recording labels such as Warner Brothers, Atlantic, Elektra, and Warner Chappell) in 2004 (Who Owns What, 2004). Meanwhile, Time Warner's stock continued to rise in 2004. Time Warner is clearly shifting their attention from old media sources, like records and sports entertainment, to new forms of media, broadband internet and internet advertising. (Vise, 2004).

The movie industry has been helping Time Warner regain its strength. There were 28 Oscar nominations and 14 Golden Globe wins in 2004 for movies from various Time Warner studios. "Lord of the Rings" was one of the movies nominated that was filmed by a Time Warner company and advertised through various Time Warner companies. The strongest studios of Time Warner are Warner Bros. and New Line Cinema (Vise, 2004).

Time Warner is currently focusing on Adelphia, a bankrupt cable company. Time Warner has teamed up with former rival Comcast to make a $17 billion bid. Time Warner's cable company is planning on merging with Adelphia. Currently, Time Warner is the nation's second-largest cable provider with about 10.9 million subscribers, and Comcast has about 21 million subscribers. Time Warner's merger with Adelphia would grant Comcast about 2 million subscribers while Time Warner would take on more than 3 million subscribers. This would allow Time Warner Cable to grow as well as help America Online. The bid has been submitted to Adelphia. Adelphia has several other bids to consider before making a decision (Grant, 2005).

Since the downfall of dial-up subscribers, Time Warner's broadband internet company will offer American Online services to subscribers for free. The deal is expected to raise advertising sales for American Online and get more subscribers to Time Warner Cable. America Online has about 23 million subscribers in the United States. This deal will give America Online a chance to revive itself. America Online will sell ads on Road Runner, Time Warner Cable's current service. Road Runner will share its revenue from advertising with Time Warner Cable. America Online would receive some revenue from Time Warner Cable's broadband internet services. Road Runner used to be considered America Online's competition within Time Warner. This is Time Warner's attempt to aid America Online's downfall. At this point, it has been four years since the merger and they are just starting to overcome the loses sustained by America Online (Angwin, 2005).

America Online is also making other plans to expand its media influence further. America Online's main focus seems to be advertising. Search engine competitors of America Online are Yahoo, Google, and MSN, and they also offer their own internet subscriptions. Google already deals with America Online, as it is 13% of Google's outside revenue. America Online is planning to overhaul its search engine and offer more features to customers, in reaction to Google and MSN's overhaul. One of the features is "buy search- related advertising" which allows users to search for products easier (Delaney & Angwin, 2005).

Angwin, J. (2005, January 31). Time Warner Cable to Add AOL To Its High-Speed Web Service. Wall Street Journal - Eastern Edition, p. B4.

Bland, E. L. (2003, September). Milestones. Time, 21.

Columbia Journalism Review. (2004). Who Owns What: Time Warner. Retrieved February 12, 2005, from the World Wide Web: http://www.cjr.org/tools/owners/timewarner.asp

Delaney, K. J. & Angwin, J. (2005, January 20). AOL to Expand Its Capabilities In Web Searches; Time Warner Unit Targets Online Advertising Segment Dominated by Google, Yahoo. Wall Street Journal - Eastern Edition, p. B4

Fabrikant, G. (2004, December 16). Time Warner Settles 2 Cases Over AOL Unit. New York Times, p. C1.

Grant, P. (2005, February 3). Time Warner Plan Is to Merge Assets With Adelphia's. Wall Street Journal - Eastern Edition, p. A6.

Vise, D. A. (2004, January 29). 2.2 Million Members Lost by AOL in 2003: Parent Firm Says Other Units Grew. Washington Post, p. E01