Skip to main content

Painful Dismemberment of a Media Monolith

StrategyEye reports that Time Warner is slowly coming around to face the harsh reality -- creating a media monolith for the 21st Century wasn't such a good idea after all.

Conceived in 2000 as the biggest media merger in history, America Online found a cable strategy and Time Warner found an Internet strategy, as the pair merged in a stock swap valued at $350 billion. Seven years later, the lesson-learned is fodder for an MBA case study.

Time Warner has said that it will consider the possible sale of its AOL dial-up internet access business in the U.S. market, after doing the same in Europe, in a bid to boost its share price.

However, chief executive Richard Parsons believes selling off the internet arm would be difficult given that it contributes to visitor traffic on the AOL.com portal -- the primary surviving remnant of the America Online business unit. "It's much more complicated here than in Europe," he told investors at the Goldman Sachs Communacopia media conference.

Some investors and Wall Street analysts have called for the sale or spin-off of the entire AOL business unit, as well as a complete divestiture of Time Warner Cable -- already a separately traded stock 84 percent owned by the parent company -- and the sale of its publishing company Time Inc.

Shares in the world's largest media company have fallen about 11 percent in the past three months.

However, while Mr. Parsons apparently does not deny the possibility of spinning off its cable division he says "We would like to see if the whole is greater than the sum of its parts, which I believe it to be. The focus right now is let's see if we can build it."

I'm reminded of the title of a book -- Hope is Not a Strategy -- when I consider the rationale behind this statement. Clearly, Mr. Parsons is reluctant to dismember this big media mammoth.

Meanwhile, AOL announced earlier this week that it is combining its various advertising businesses to form a new unit called Platform A. The company also announced it is moving its corporate headquarters from Dulles, Virginia to New York City.

AOL has also recently completed a series of acquisitions as it shifts its business model from a paid subscription to one that's supported by advertising. While it's too soon to determine if the company will regain its lost momentum, perhaps a change of scenery and the infusion of some savvy new talent will make a difference.

I believe that Time Warner's trials and tribulations mark the closing chapter to the era of a big media monolith, while they also highlight the emergence of a significant and invigorating change to the media status quo. The notion of micro-marketing is a driving force to this disruption.

That said, not everyone agrees that focused and nimble is the logical approach to apply to digital media distribution. "With the increasing fragmentation of online audiences, the best way to serve advertisers is to enable them to harness massive advertising networks that reach across the entire Internet, not just our AOL websites," said Randy Falco, Chairman and CEO of AOL.

Perhaps proving once again, it's really difficult for some people to think of media innovation without including the word mass within the equation.

Popular posts from this blog

Wireless Solutions Advance Work from Home Trends

Despite a challenging backdrop from the ongoing effects of the global COVID-19 pandemic, the negative impact on fifth-generation (5G) wireless supply chains has been minimal compared to the wider mobile smartphone market. This led to 5G mobile devices becoming more diverse, brought to market quickly at a variety of price points, thereby accelerating affordability and adoption. The mobile market is transitioning to 5G and many leading vendors are now exploring the low-priced 5G smartphone segment. According to the latest worldwide market study by ABI Research, 681 million 5G handsets will be shipped in 2022. Therefore, the race is on for OEMs to find that all-important level of differentiation in their flagship portfolios to help boost margins and improve market share. 5G Wireless Market Development Vendors continue to drive the adoption of new product designs, screen technology, chipsets, and camera setups -- notably within the flagship smartphone segment. Meanwhile, the leaders seek a

Software-Defined Infrastructure: The Platform of Choice

As more organizations adapt to a hybrid working model for their distributed workforce, enterprise CIOs and CTOs are tasked with delivering new productivity-enabling applications, while also seeking ways to effectively reduce IT cost, complexity, and risk. Traditional IT hardware infrastructure is evolving to more software-based solutions. The worldwide software-defined infrastructure (SDI) combined software market reached $12.17 billion during 2020 -- that's an increase of 5 percent over 2019, according to the latest market study by International Data Corporation (IDC). The market grew faster than other core IT technologies. The three technology pillars within the SDI market are: software-defined compute (53 percent of market value), software-defined storage controller (36 percent), and software-defined networking (11 percent). "Software-defined infrastructure solutions have long been popular for companies looking to eliminate cost, complexity, and risk within their data cente

Digital Identity Verification Market to Reach $16.7B

As more enterprise organizations embrace the ongoing transition to digital business transformation, CIOs and CTOs are adopting new technologies that enable the secure identification of individuals within their key stakeholder communities. A "digital identity" is a unique representation of a person. It enables individuals to prove their physical identity during transactions. Moreover, a digital identity is a set of validated digital attributes and credentials for online interactions -- similar to a person's identity within the physical world. Individuals can use a 'digital ID' to be verified through an authorized digital channel. Usually issued or regulated by a national ID scheme, a digital identity serves to identify a unique person online or offline. Digital Identity Systems Market Development Complementary to more traditional forms of identification, digital identity verification systems can enhance the authenticity, security, confidentiality, and efficiency of