Time Warner Inc. is dumping AOL after spending nearly a decade trying to build a new-age media empire only to wind up in a weaker position than when the marriage began.The divorce, announced Thursday, will spin out AOL as a separate company run by former Google Inc. advertising executive Tim Armstrong. He was hired in March to try to restore the luster to a brand once known as America Online.
Although AOL has been eclipsed by Google and other Internet stars, Armstrong still can try to build on a wide-reaching online ad network as well as AOL's Web sites, which remain a relatively big draw.
Time Warner owns 95 percent of AOL and will buy out Google's 5 percent stake during the third quarter for an undisclosed amount. From there, AOL — which has about 7,000 employees — will be spun off into a separate publicly traded company around the end of the year.
The merger itself wasn't the problem. It made a sort of sense for a media company to purchase an internet portal to which it could promote and distribute its content. What made AOL-Time Warner absurd was (1) the price paid ($147 billion!!!) and (2) the fact that AOL was the buyer. This was the height of New Economy/New Media hype when otherwise reasonable adults seemed to believe the normal rules of economics and history had been repealed based on little more than 5 years' worth of good times. It's notable that we haven't really learned anything from this. The bubbles that popped during the Crash of '08 were similarly dependent on this sort of BS and willfull blindness among the so-called business elites.
This was a combination of young men who thought "We Are the Future" and old men who were afraid that the future was passing them by. No one seems to have paused to ask whether the future they envisioned was even possible.
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