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Time Warner To Be Split Into Four Parts?

Zonk posted more than 8 years ago | from the baby-warners dept.

Businesses 107

Shakrai writes "CNN Money is running a story titled Icahn eyes Time Warner break-up. Carl Icahn is a fairly well known investor who is pushing to break the Time Warner empire into at least four different business units. While his motivation seems to stem from business interests -- he thinks it will work out better for Time Warner in the long run -- I thought it raised an interesting point of discussion. Will the vertically integrated media empires that control content creation, content distribution, internet access and the news media become the Ma Bells of the 21st century? What can be done to protect consumers without stifling the technological innovation that we all know is so important?"

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Weird (4, Interesting)

FST (766202) | more than 8 years ago | (#14177944)

Does anyone else find it weird that just a few years ago, big mergers were all the rage and "synergy" was the magic buzzword in corporate America and on Wall Street. So why are so many companies now rushing to get unhitched? Also, is this outbreak of corporate divorces good for shareholders, or should I sell my stocks now?

Re:Weird (1)

ctenet (602204) | more than 8 years ago | (#14177975)

Some of the "baby bells" have done well since the AT&T breakup in the 1980s, but it's important to note that Bell South is the only one that hasn't merged with something else. Bell Atlantic bought NYNEX (two baby bells; NYNEX was created at the breakup as what was formerly known as NY Telephone and NE Telephone) merged to make Bell Atlantic. (NOT Verizon; the name "Verizon" came into use when Bell Atlantic bought GTE, because that made the company exted west.) So perhaps the four parts may merge with other related companies, or perhaps even eventually with each-other.

Re:Weird (1)

Angstroem (692547) | more than 8 years ago | (#14178028)

Considering research, the breakup was no good thing. AT&T research and Bell Labs are a mere shadow of what they've been in the past.

A positive merger (3, Informative)

lheal (86013) | more than 8 years ago | (#14178039)

I'm a former GTE customer. From a customer service and quality standpoint they were the worst company I've ever dealt with. Every time I had to deal with them they botched it.

Since they merged with Bell Atlantic and became Verizon, I'm fairly happy with them. They adopted the policy (for their customer service reps, anyway) that one way or another they wouldn't stop working until your problem was resolved.

Their prices are too high, but at least they fix whatever you tell them is wrong.

But Icahn is just trying to "flip" them, as you would a piece a furniture you got at a garage sale and put on Ebay.

"them" == Time Warner (1)

lheal (86013) | more than 8 years ago | (#14178062)

not GTE, sorry.

Re:Weird (3, Interesting)

faqmaster (172770) | more than 8 years ago | (#14177991)

Seems to be a natural cycle - intergrate, disintegrate. At an abstract level (the level that the board members or uber-investors look at) the four areas mentioned in the writeup look like they have a lot in common and would benefit from integration. So someone puts them all together by talking up this thing called synergy. Only then do they see that the specific methods that each of those entities use to implement their functions are very different and in some cases incompatible.

I mean, if you didn't know anything about how each of those areas worked, it would seem logical to think there's a natural flow from production to distribution to access (and news reporting is just a specialized version of that whole process). But, there's a reason Wal-Mart doesn't manufacture anything, and there's a reason that factories in China don't have retail stores here in the US.

Re:Weird (2, Interesting)

dattaway (3088) | more than 8 years ago | (#14178005)

Its called "moving and shaking." Its how you get the senior employees nervous and take pay cuts and severances.

Re:Weird (1)

superpulpsicle (533373) | more than 8 years ago | (#14179062)

Do you mean the other way around? Usually during a merger/acquisition people are let go due to overlapping positions. In a break up, everybody wins since there will now be 4x the need in a 4 way split.

Re:Weird (2, Interesting)

N3Bruce (154308) | more than 8 years ago | (#14181809)

Spinoffs are a way of forcing the now independent business units to survive on their own merits. Often money losing divisions are spun off and allowed to lapse into bankruptcy or liquidation, rather than continuing to be a drain on the parent company's profits. The first time I remember this, I was a vendor for the former Wal-Mart wannabee Woolco, which was a 300 store chain that was part of F.W. Woolworth into the early '80s. I remember the old timers seeing this as a bad omen when they were spun off from their parent. Sure enough, 2 months later they held their going out of business sale. In this case everybody loses their job.

On the other hand, spinning off a troubled division can free it from the meddling, interference and bad decisions of a parent company that is out of touch with the soul of the division being spun off. One of the most famous examples of this was Harley-Davidson. Harley-Davidson became part of AMF Corporation during the diversification frenzy of the 1960s and 1970s. AMF ran everything from machine tools to bowling alley equipment to sporting goods. Harley-Davidson motorcycles were just another product to be manufactured, and their desirability and quality hit an all-time low during this era. They had been pretty much run into the ground by the time they were spun off, but the new company (with a little help from tarriffs on large Japanese motorcycles) was able to turn things around, and their bikes now sell at large premiums compared to comparable Japanese models, and they own nearly half of the domestic market for motorcycles.

Finally, the economies of reduced overhead for administrative functions by a small business being absorbed by a larger one are often disappointing, due to the cost of integrating information systems, manufacturing and distribution facilities, and the culture clash between organizations that takes place during mergers. In recent years I have stood by as the banking business has undergone wave after wave of consolidations and mergers. On the operational level, it takes years to sort out everything from management structure to what equipment they should retain, move, buy, or sell. Many of my customers have seen the name on their buildings change several times, but they are pretty much the same bunch of people doing the same type of work they have always done. In the meantime, an organizational paralysis often sets in as employees and managers worry more about how they will fit into the new organization instead of building the business.

  Going the other way and spinning off a division gives the new company the freedom to select the types of services, equipment, people, and structure that are appropriate for the size and type of business they are in. There might still be some duplication of a few things, but the smaller organization does not need for instance, the large and complex systems that large organizations do.

It's called CASHING IN!!!! (1)

willtsmith (466546) | more than 8 years ago | (#14182581)

Breakups and mergers cause movements in stock prices. They also create a whirlwind of new options for newly created (or divided) companies.

Acquisitions are truly about expanding a large company into new areas (or buying out the competition). Mergers and break-ups are all about making the executives richer than they already are.

Who pays ???? All you saps who will go out and buy AOL-Time-Warner stock.

Re:Weird (1)

ysegalov (849765) | more than 8 years ago | (#14178017)

The merging has not stopped - see other fields. e.g. the Europian Union now holding - what - 15 countries?

Re:Weird (3, Insightful)

alen (225700) | more than 8 years ago | (#14178038)

I read One up on Wall Street some years back. It was written by one of the best mutual fund managers in history. It's a natural cycle and the only real winners are the investment banks that get fees in every transaction.

Re:Weird (1)

Thing 1 (178996) | more than 8 years ago | (#14179301)

That's right: "No matter if the investors make money or lose money, Duke and Duke gets their commission."

Billy Ray: "You guys are a couple of bookies!"

Not so weird (5, Interesting)

canuck57 (662392) | more than 8 years ago | (#14178059)

Does anyone else find it weird that just a few years ago, big mergers were all the rage and "synergy" was the magic buzzword in corporate America and on Wall Street.

Not really so weird. Boards and execs have little to do but cook up a buy, merger or divestiture. It is self justification for their existance. But what a waste of money.

The truth is the rich at the top want to keep one part of the company and cash out another and now realize the merger was stupid. My guess is AOL has been loosing too many customers under the new management and instead of dealing with the synergy and management issues they are going to cut AOL back out on their own.

It is too bad short term greed and short sightedness were not the only traights you need on a good board of directors, if so America would be rich.

If... (0)

Anonymous Coward | more than 8 years ago | (#14178156)

"It is too bad short term greed and short sightedness were not the only traights you need on a good board of directors, if so America would be rich."

Wait a second... America isn't rich?

Re:Not so weird (1)

Generic Guy (678542) | more than 8 years ago | (#14178352)

The truth is the rich at the top want to keep one part of the company and cash out another and now realize the merger was stupid.

Gee, I've been saying since, oh I dunno, around 2000 that this was a stupid idea. They claimed they would have "synergy" between divisions (a sure sign of management buzzword cockery) and cross-promotion. All it really meant is that it moved ad dollars from one internal spreadsheet to another internal spreadsheet.

And yes, I've since made sure to _not_ buy into Time Warner nor AOL.

If there is ANY business here ... (1)

willtsmith (466546) | more than 8 years ago | (#14182640)

If there is ANY real business strategy here (beyond just pushing paper and scraping profits while all the books are unsettled), it's to capitalize on AOLs one true asset, ignorance.

There is an entire legions out there who believe AOL IS the internet. They aren't techno savvy but they've learned how to use AOL's bloated interface.

Like Mario or Halo, AOL's true value is as an "exclusive". Exclusive to who you say??? Exclusive to the big media conglomerate that will come along and BUY AOL after they have been spun off. Why not sell directly? Well that would only mean ONE commission for the money brokers.

It could be comcast, it could be verizon. Than again, maybe their best strategy is to license their interface like TIVO has done.

With wireless broadband marching steadily into the consumer space, it's pretty clear that AOL will soon be OUT of the "onramp" business. And AOLs value as a portal really isn't that great (this is a battle between Google, Yahoo and MSN).

The problem with current broadband subscription is that AOL is NOT the default. Some liberated service installer can show users how to reach websites WITHOUT AOL. That's BAD. They can even setup their mail using Outlook Express. That's EVEN WORSE!!!!

What AOL needs is for those installation techs to install AOL AS THE DEFAULT!!! What they need is AOCelL for wireless instant messaging.

The only way to keep people in the cave is to keep their eyes on the wall. When someone gets between AOL and their users, they can show them a whole new world. AOLs job is to figure out how to stop their users from becoming knowlegable!!!!

Re:Weird (0)

Anonymous Coward | more than 8 years ago | (#14178298)

See the film:


Although it's a comedy, it illustrates why "synergy" is looked at to make companies appear to have more active sales than they actually do, because they do it between "sibling" companies (members of the same conglomerate selling one another goods & services).

A good accounting trick really - that's what I drew from it & I'd wager it's VERY applicable in this capacity to help "overvalue" a company/conglomerate & it's constituent child companies!


Re:Weird (1)

creimer (824291) | more than 8 years ago | (#14178494)

This is nothing. Multi-billion USD buyouts are becoming more common with the expectation that the controlling company will be able to sell the newly bought company for a profit in five to seven years. What's going to happen when they can't sell at a profit as there are no buyers because everyone else is trying to unload their properties?

The only people who are making money on this are the ones collecting the banking fees on both ends. Everyone else can go suck a free-market lemon.

Re:Weird (1)

furiouscommie (910317) | more than 8 years ago | (#14178923)

Mod parent down. Lifted from TFA.

It's cause copyrights are DOA (1)

argoff (142580) | more than 8 years ago | (#14179021)

Does anyone else find it weird that just a few years ago, big mergers were all the rage and "synergy" was the magic buzzword in corporate America and on Wall Street. So why are so many companies now rushing to get unhitched? Also, is this outbreak of corporate divorces good for shareholders, or should I sell my stocks now?

This is because many large orginisations assumed that the entire purpose and meaning of the information age was to use inventions like the internet to leverage their copyright holdings for unlimited growth and profit. History is repeating itself really ....

Dursing the 1850's there were many industries who assumed that the entire purpose and meaning of the industrial revolution was to leverage inventions like the cotton gin to expand their slave plantations for unlimited growth and profit. At first, the industrialists were a close and tight nit family with the plantationists, but soon it became apparent that the mobile labor force that was needed by the industrialists was the anti-christ of the plantation system and the forces that drove them appart were greater than the ones that bound them together.

The same is true today, the tech industries benefit from the unrestricted flow of content, wehere the media industries benefit from total controll over it. They are completely incompatable paradigms and the forces that are driving them apart are greater than the ones holding them together. All I can say, is get ready for all freakin hell to break loose.

So you predict ... (1)

willtsmith (466546) | more than 8 years ago | (#14182656)

So you predict that Sony will sell off it's music and movie studios sometime soon?

Re:Weird (1)

Daniel Dvorkin (106857) | more than 8 years ago | (#14179455)

Because there are two opposing tendencies at work. One is that any organization (business, governmental, religious, etc.) tries to expand itself, both within its current domain and by moving into others. The other is that most organizations work best when, in fact, they do one thing well rather than by doing lots of things poorly -- and preferably at a smaller scale than that of the megacorporations, because any organization that big inevitably spends more of its resources on administration than it does on production. In a rational economy, we'd see a bunch of small-to-medium-sized niche businesses all competing with and selling to each other; but of course organizations are run by people, specifically bureacrats, who are not rational, especially when they're acting in the service of their own bureaucracy. To paraphrase Jefferson, no one who wants to run anything should be allowed to do so -- but those are the types of people who inevitably end up running things, because no one else wants to job.

Weird? No! Brilliant! (1)

Ben Jackson (30284) | more than 8 years ago | (#14179581)

They're just splitting up Time Warner into four new "collectable" pieces[*] to make them more attractive to Google.

* While supplies last. No purchase necessary. See store for official rules.

Stifling innovation (1, Insightful)

Anonymous Coward | more than 8 years ago | (#14177959)

What can be done? Break ALL of these companies up, Microsoft included (like it should have been years ago). That's how! Until then, the Bullshit DMCA Takedowns and Frivolous Lawsuits No One Can Afford To Fight will run rampant.

Re:Stifling innovation (1)

Urusai (865560) | more than 8 years ago | (#14178503)

Go further. Ban corporations (as a protected entity, at least). Corporations are a means of absolving the rich of the consequences of their actions.

Note that while YOUR ability to declare bankrupcy has been gutted by the elite (in the US), the corporations are doing it as a matter of course to shed their obligations. What SHOULD happen is management should burn in a corporate bankrupcy (all prior remuneration should be liable for seizure, at a minimum). What really happens, is a company declares bankrupcy, screws their employees and suppliers, becomes solvent by borrowing from the government (in essence), and then management gives itself a raise. The airlines are doing it (thanks to government money after 9/11), GM and Ford are going to do it.

Re:Stifling innovation (1)

NineNine (235196) | more than 8 years ago | (#14178713)

What the management does is irrelevant. The owners of the companies still get screwed when a company goes under. Corporate owners generally are not protected at all. Did you get compensated for any of the dot-bomb stocks you bought? I don't know anybody that did. At least with a personal bankruptcy, you still have a house, and a means to work.

Re:Stifling innovation (1)

petermgreen (876956) | more than 8 years ago | (#14179682)

the shareholders don't get any compensation but they don't get any liability either.

whereas if you do buisness without a limited liability company you stand to lose everything except perhaps your house (depending on the local laws).

the reason corporations have become amoral and dangerous entities is because there is sufficant abstraction between the primary investor (usually through some kind of fund) and the company being invested in that they don't feel resposible for things the company does.

Time Warner execs are singularity stupid (-1, Offtopic)

AEton (654737) | more than 8 years ago | (#14177962)

TIME Warner []

4Day Warner Disproves 1Day God
All TV within the universe is composed of
opposite hemispheres and opposite sexes - with
opposite races, opposite seasons, opposite luck,
opposite directions and opposite perspectives -
equating a harmonic rotating zero value existence.
"To know all, is to know nothing".
You must attack the word bastards who preach
and teach evil godism and racism singularity lies,
for any singularity brotherhood is mental slavery
that desecrates family, village and tribal opposites.
Americans are dumbass, educated stupid and evil
singularity fools. I will wager $10,000.00 that
within the Warneric embodiment of Nature, there are
4 simultaneous 24 hour days within a single rotation
of Earth. Acknowledge the math below or go to hell.
4 Day Warner disproves 1 Day God.

1-Midday to midday = a 24 hour day rotation.
2-Sundown to sundown = a 24 hour day rotation.
3-Midnight to midnight = a 24 hour day rotation.
4-Sunup to sunup = a 24 hour day rotation.

4 Day math condemns 1 Day fools.
These 4 absolute simultaneous TV channels PROVES the
1 day god, 1day academia, 1 day religion and the
1 day media to be erroneous, fictitious and evil lies.
Education equates to a mass icepick lobotomy -
destroying the mind's ability to think as opposites.

All 4/24 episodes occur within 1 Earth rotation.
You educated stupid word animals can't fathom
this greatest social and scientific math of creation.

God claimed to have created a single day
rotation of Earth. I have created simultaneous
4 day rotation of Time Warner. Why do you worship
such a stupid God? Do you really believe that
your Jew God screwed a hole in the ground to
create Adam and Eve out of dirt, at the same
time that woman existed in the nation of NOD,
Nation of Damsels from where Cain got wife?
Adam and Eve were created at the same time,
but sexless. A rib was removed from eve and
a hole left to make a woman of her. The rib
was stuck on Adam to make a man of him -
and Eve is still trying to get her rib back.

Recognition and application of this Warneric
simultaneous 4 day rotation of Earth,
will change all math, science and societies
from the beginning of human existence.
You have to be evil to ignore this math.

There is proof that 3 dimensional
math is erroneous, and that linear
Time is actually of a Warneric nature.
Ignoring Warnerism indicts you evil.

Re:Time Warner execs are singularity stupid (0)

Anonymous Coward | more than 8 years ago | (#14180926)

Um...that's a nice poem.

Here, these people [] can help you.

Fairly well-known (0, Offtopic)

OriginalArlen (726444) | more than 8 years ago | (#14177966)

Yeah, Carl Icahn's fairly well known. In other news, the faeces of the species Ursus Ursus is often discovered in arboreal settings, and it is believed that a German chap in a house in Rome is titular head of the organisation known as the "Holy Catholic and Apostolic Church".

What will happen to the Netscape Divison ? (5, Interesting)

axonis (640949) | more than 8 years ago | (#14177967)

I guess if AOL is going to be set free, and probably aquired, Netscape will also suffer its final fait too... i can imagine that it will evntually get killed off , marking the end of a once great Internet company.

Re:What will happen to the Netscape Divison ? (2, Interesting)

SpinJaunt (847897) | more than 8 years ago | (#14177981)

Netscape still has an after-life in the form of Mozilla, which if above does become true, maybe Mozilla could take a name change and become Netscape once again.

Still, I am just thinking aloud.

Re:What will happen to the Netscape Divison ? (1)

AndroidCat (229562) | more than 8 years ago | (#14178176)

Why? The Mozilla name hints back to its Mosaic [] roots and doesn't come with the vast baggage of the Netscape name.

I don't think they should (1)

Pneuma ROCKS (906002) | more than 8 years ago | (#14178372)

Mozilla could take a name change and become Netscape once again.

Even if Netscape is its predecessor, Mozilla has stood on its own and has gained worldwide respect without being associated to Netscape. As another reply stated, Netscape has a lot of baggage and people don't react to that old name anymore. Mozilla has existed for a long time, but Mozilla Firefox is a relatively new product, and that helps getting some new users. Mozilla shouldn't change to Netscape because it is not Netscape. It's a whole new thing.

Re:What will happen to the Netscape Divison ? (1)

jZnat (793348) | more than 8 years ago | (#14179236)

After they acquired [] ? I mean, sure, `grep -R ns mozilla/' to see how nearly every class and template in the source is prefixed with `ns', so yeah, the Netscape roots still continue to exist.

Re:What will happen to the Netscape Divison ? (1, Insightful)

Algus (567777) | more than 8 years ago | (#14177985)

Agree about Netscape, it'll be sad to see it go though AOL deserves its fate. Its nothing but worthless tar, anyone who would pay $25 a month for dial-up access is a fool and anyone who would pay $10 a month on top of their broadband service provider just to see AOL's crappy ABC News Feeds is a fool too. They deserve their fate for being greedy bastards.

Re:What will happen to the Netscape Divison ? (0)

Anonymous Coward | more than 8 years ago | (#14178033)

There's nothing left to kill off. All that remains of Netscape within AOL is the name and a few scattered employees. I think there's only one office building left of what used to be the Netscape Campus (down from a dozen or so) & I don't think most of those people are even working on Netscape related projects.

Netscape is dead and has been for quite some time.

Re:What will happen to the Netscape Divison ? (0)

Anonymous Coward | more than 8 years ago | (#14178200)

I'm sure that AOL has already gone through its clothes and looked for loose change, so it's not even mostly dead.

Re:What will happen to the Netscape Divison ? (2, Interesting)

g0dsp33d (849253) | more than 8 years ago | (#14178120)

I'm more concerned about winamp. I hope someone trustworthy buys the name. I'm still running the last pre AOL version.

no matter (1)

YesIAmAScript (886271) | more than 8 years ago | (#14179365)

As far as I can tell, many of the Netscape people are over at Google now anyway. I happened to be there on the day Firefox 1.5 went gold and saw them whooping it up a bit.

I presume Google pays them (and lets them use their free cafeteria, etc.), but I dunno who they really work for (report to).

Re:What will happen to the Netscape Divison ? (1)

WWWWolf (2428) | more than 8 years ago | (#14180054)

Good Lord, why isn't Netscape dead yet? Can't the authorities see that AOLTW is keeping them in constant pain [] and misery [] ? I mean, good grief this is awful [] .

People whine about corporations having all rights of humans but no responsibilities; I don't want to discuss the ethics of euthanasia what comes to humans, but bloody heck, someone ought to legalize corporate euthanasia.

"Netscape" doesn't exist anymore (0)

Anonymous Coward | more than 8 years ago | (#14181565)

As far as I know, Netscape doesn't exist anymore and has not existed for some years. I think they have been contracting their projects and no longer even have in-house developers. At least I know the Netscape 8.0 web-browser was just a refurbished Firefox outsourced to some Canadian company with the Netscape logo popped on top.

Sad to say it, but I'm pretty sure the death of a great Internet company has already occured..

But when they come together (2, Funny)

Anonymous Coward | more than 8 years ago | (#14178000)

They form AOL-Time-Warner-Tron!

(Ted Turner likes to play the head.)

Easy solution... (0)

Anonymous Coward | more than 8 years ago | (#14178002)

Ti, Me, War and Ner.

Pah! Wasn't too hard was it?

Re:Easy solution... (1)

julesh (229690) | more than 8 years ago | (#14178034)

I really want to work for "Ner." Do you think they'd give me a job?

Catching up with the past (2, Insightful)

Walzmyn (913748) | more than 8 years ago | (#14178032)

This is just Catching up with the past isn't it? From what I've read the Aol merger never went very well and most folks thought they should have been blocked by the government anyway.
I've always thought they were putting too many different colored eggs in one basket

Splitting the company up will only help innovation (5, Insightful)

hellfire (86129) | more than 8 years ago | (#14178037)

The larger a company is, the less it competes on quality and innovation, and the more it competes on price and muscle. Smaller companies are more agile and can change more quickly.

My personal opinion is that Icahn is pushing this for simply financial reasons. Quite simply, Time Warner has money making divisions, and others are dead weight that should jettisoned. By splitting them up, an investor ends up with some kind of stock split amongst the resulting companies. They then sell off the loser stocks and put that money back into the good portions. This would be a great way to kill off AOL once and for all. AOL is the only division I know of that's dead weight, but there could be others. I'm really just guessing here. MY point is that Icahn is doing this for money reasons. It's the only reason why he would, and neither the article nor the submitter make any mention of this, which is extremely short sighted.

However, regardless of the financial motivations, I completely support a break up of any company as large as this, purely because it benefits consumers with competition. Also, while a merger usually ends up in "eliminating redunancies" in jobs, a break up will usually put those "redundancies" back and open up at least a few new jobs to fill.

No brainer really... get the sledgehammers out and start breaking!

Re:Splitting the company up will only help innovat (1, Interesting)

Anonymous Coward | more than 8 years ago | (#14178104)

Yet equally large companies have a much greater scope for innovation :

1). They have much larger turnover, and thus a much larger budget for R&D.
2). They have a much larger consumer base that already identifies with their products as of quality, and thus the unit cost of the R&D investment is *much* smaller than that of small companies
3). They have greater incentive to get those last few percentage points of market share that make them a de factor monopoly - as it's easier for them than for a smaller company.

In addition, given the 'leap-frogging' of companies in market share that is possible within information industries (see google), there is an even greater incentive for them to innovate as, just beacuse the competition is behind you today, they could easily be kicking your ass in a few months.

Thus, the information age gives bigger companies both a greater scope *and* a greater incentive to invest in R&D.

Re:Splitting the company up will only help innovat (3, Insightful)

jeillah (147690) | more than 8 years ago | (#14178210)

Not to defend AOL or anything but you are wrong that AOL is the only dead weight in Time-Warner. AOL supplies over a billion $ a year in profit back to Time Warner. Not to mention the 11% of Google's business they supply. Certainly, AOL is not the cash machine it once was but they are far from dead. They are now shifting their focus from a member-centric model to an ad supported model. If you don't think that will work out for them then you'd better sell all of your Google and Microsoft stock because that is exactly their plans for the future too.

The merger was probably never a good idea but it was made worse when the two architects of the new company lost their focus shortly after the merger. With those two out of the picture the suits took over and the results are history.

Who can say what would have happened if the merger hadn't taken place but I think Time Warner would have been in a lot of trouble. The magazine business was losing ad money to the internet and don't get me started about their movies... Little Nicky, that stoopid Eddie Murphy space movie, please... The only thing that was making money was music and even that went to hell a few years later. That company was and is run by a bunch of greedy old school suits who have no clue what the real public wants or needs. They finally did get lucky with the HP and LOTR movies but I doubt if they could have done those without the money AOL was kicking in.

The best thing that could happen would be for the company to be split up. Then each new company could stand or fall on it's own and not be held back or propped up by the losing divisions. Maybe AOL will get picked up by someone who actually knows what the internet is...

Re:Splitting the company up will only help innovat (1)

quanticle (843097) | more than 8 years ago | (#14178753)

Not to mention the 11% of Google's business they supply.

If AOL is spun off and killed, its not like its customers would just drop off the Internet. They would find other ISPs, and therefore Google would still presumably get their business. Its just that you'd see a host of smaller contributors to Google's traffic, rather than a large block coming from AOL.

Re:Splitting the company up will only help innovat (1)

Thing 1 (178996) | more than 8 years ago | (#14179482)

They are now shifting their focus from a member-centric model to an ad supported model. If you don't think that will work out for them then you'd better sell all of your Google and Microsoft stock because that is exactly their plans for the future too.

I think it will work. I think it's really amazing cool that it will work, also, because it validates some people's foresight [] of the future: that money will increasingly become obsolete (not all at once).

Once we achieve nanotechnology, we'll be able to create any good from dirt and sunlight. Services are a slightly different story; we'd be able to create robots to perform the services, so no human would need to work.

In a pre-nanotech society (but one rapidly approaching nanotech), it makes sense that as much as possible, goods and services would be available to humans at no cost, and the companies would make their money via advertising. This is, largely, one company giving another company pieces of paper in order for both companies to continue to provide something for free to citizens.

So what I'm getting at is, enjoy the free stuff because there will be even more of it in the future!

Re:Splitting the company up will only help innovat (1)

hellfire (86129) | more than 8 years ago | (#14180939)

Not to defend AOL or anything but you are wrong that AOL is the only dead weight in Time-Warner.

I didn't say they AOL was the only dead weight at Time Warner. I said they were the only dead weight I knew of.

Re:Splitting the company up will only help innovat (0)

Anonymous Coward | more than 8 years ago | (#14178220)

AOL is the only division I know of that's dead weight, but there could be others. I'm really just guessing here. You write 3-4 paragraphs espousing your views, then in the middle of it you negate it all by admitting that you're just guessing. Nice. Despite AOL's loss of customers it still has a larger free cash flow than any other division. That has not changed despite the loss of dial-up subscribers (where AOL has traditionally had its largest profit margin). TWX got rid of/sold Warner Music because it had such a pile of debt. Time Inc, the magazine publisher, is or should be next on the chopping block. Their debt levels compared with their income is fairly low. The movie studios do well, but it is fair more cyclical and subject to the studio putting out a bad movie or two. Next to AOL's revenue, only Time Warner Cable really delivers on cash and future stability (until the FCC gets done with their a la carte rulings). Will AOL die off altogether or will it die off as an ISP? That all depends on the success of the transformation being put together by Jonathan Miller to move the company to ad-driven portals.

Just a note (1)

colinrichardday (768814) | more than 8 years ago | (#14178498)

Of course, AOL competes against Road Runner. Will Time Warner let AOL logo fall off a cliff?

Re:Splitting the company up will only help innovat (1, Insightful)

Anonymous Coward | more than 8 years ago | (#14178266)

"AOL is the only division I know of that's dead weight"

Make some conservative assumptions:

10,000,000 members paying $20/month

Revenue of $200,000,000/month, over $2billion a year. The cost to AOL of one of these accounts is less than $10/month.

Yeah, $100million free cash flow/month. That's dead weight...sure.

Time Warner *wants* to ditch AOL because of old wounds, but Time Warner can't afford's too much free money currently, which is used to fund their less-spectacular divisions.

Ted Turner agrees with you. (1)

jamrock (863246) | more than 8 years ago | (#14180203)

In a well-wnitten opinion piece in the July/August 2004 Washington Monthly titled "My Beef With Big Media" [] , Ted Turner argues for the break-up of media conglomerates. He makes the case that they not only stifle innovation, they are also frighteningly bad for democracy. To my mind, Turner's argument is the best so far against these conglomerates. He has also been perhaps the most strident critic of CNN's devolution into an infotainment channel over the past few years, and it's worth noting that he may have axes to grind due to his strenuous opposition to the acquisition of Time Warner by AOL, but his arguments are no less valid for all that.

Reminiscent of AT&T in 2001 (1)

xanderwilson (662093) | more than 8 years ago | (#14178040)

And I'm not talking about the monopoly issue decades ago. A few years ago AT&T split into four companies voluntarily, including AT&T Wireless, Cable, Broadband, and Consumer Services Units. It ended up a bad idea, but then maybe they would have done much worese if they hadn't done the split. I think Wireless at the time was the only profitable one.

That said, TW hasn't really taken advantage of "synergy" opportunities enough to benefit from having it all in one company. If the problem is that it takes too long for the behemoth to move, then maybe this is a good idea.


The 4 parts??? (-1, Troll)

Anonymous Coward | more than 8 years ago | (#14178063)

1. Copyright infringement attack-dogs.
2. The ones responsible for re-moulding excrement, spraying it with perfume and selling it as 'something new'.
3. The rich corporate types. They do nothing except leech more money from others.
4. The part that finds ever more inventive ways to screw their artists. illion%20dvd []

Technical innovation in media (1, Interesting)

Anonymous Coward | more than 8 years ago | (#14178064)

Pff, technical innovation in media being so important that vertical integration is necessary? Surely not. If you look at real, practical benefits to people large scale engineering has more tangible benefits than innovation in media, and gets a lot less exposure or funding. Media and entertainment is a time sink more than anything, and you could argue that it's effects mean that people now are less developed in the arts than they were 60 years ago. Although admittedly there will be a sliding scale ranging from those who use computers and the internet for learning and active interests, to those who only surf for pr0n.

It's true! (3, Funny)

tehshen (794722) | more than 8 years ago | (#14178071)

Split into four parts, eh?

Tim: for people called Tim
e w: for disgusting things
arn: the Access Research Network, apparently.
er: for uncertain things?

NOT Ma Bell (1)

a_greer2005 (863926) | more than 8 years ago | (#14178072)

TimeWarner is in all components of the industry, but you still have a choice;
Cable or DSL,
Cable or DSS,
CNN or Foxnews or MSNBC or the web or all of the above,
Artists dont HAVE to sign with Warner Music, there are many other lables, or Indy. Same with movies
As far as online content goes, Apple/Yahoo/Napster/google and others in that ilk are eating AOL/Warners lunch

The real Ma Bells of our time are the **AAs that really act in abuse of their monopoly.

Re:NOT Ma Bell (1)

cfulmer (3166) | more than 8 years ago | (#14178189)

I assume that you're talking about the MPAA (Motion Picture Ass'n of America) and the RIAA (Recording Industry Ass'n of America). They're not monopolies because they don't sell any significant products. The products are made by their member companies, which compete with each other.

So longs as trade associations are not not used as vehicles to, say, agree on prices or output, they're not anti-competitive at all. It's possible to be evil without being a monopoly.

Re:NOT Ma Bell (1)

tepples (727027) | more than 8 years ago | (#14178416)

The products are made by their member companies, which compete with each other.

Records by different songwriters and different artists are not close substitutes. How is this competition?

So longs as trade associations are not not used as vehicles to, say, agree on prices or output, they're not anti-competitive at all.

Problem with your reasoning is that many critics of the RIAA and MPAA would allege that the associations are used as vehicles to, say, agree on prices or output. If a record label were to give away a single as a free download (which by the way isn't dumping unless someone gets residuals), it would hurt the RIAA's "tough on piracy" image.

It's possible to be evil without being a monopoly.

Except the legislatures haven't recognized this, which is why almost everyone tries to shoehorn evil behavior into other offenses such as antitrust violation.

But usually only one label makes an offer, right? (1)

tepples (727027) | more than 8 years ago | (#14178290)

Cable or DSL, Cable or DSS

Not everybody has a choice between cable and DSL, especially given that many local telephone monopolies have been dragging their feet. And because cable Internet is traditionally tied to cable television, you can't choose satellite TV if you want high-speed Internet.

Artists dont HAVE to sign with Warner Music

Unless Warner Music is the only label whose A&R department will give them an offer that includes retail distribution in chain stores such as Best Buy and Tower (for people who don't have high-speed Internet access to buy the album as a digital delivery such as through iTMS) and promotion on commercial FM radio (for people who don't have mobile Internet access to listen to Internet radio in a motor vehicle). Then you have a monopsony [] , which becomes a monopoly on that artist's music on the consumer end.

All these big companies... (2, Interesting)

MaestroSartori (146297) | more than 8 years ago | (#14178078)

...seem to suffer from the same problem - although they run the full range of medial production, none of them seem to be able to effectively merge the different parts of the company to produce any great result.After all, Time Warner have a huge back catalog of music and film sitting there, but they've provided no means for customers of AOL to access any of it. Maybe they're working on that, i dunno, but all these big merged conglomerates like Sony BMG, Time Warner, none of them are visibly making any real efforts to do things involving the full spectrum of business interests they cover.

I always wonder if it's because despite being "merged" on paper, internally they still run as separate businesses with all the competing and territoriality that implies... :(

Radio@AOL (1)

tepples (727027) | more than 8 years ago | (#14178440)

Time Warner have a huge back catalog of music and film sitting there, but they've provided no means for customers of AOL to access any of it.

For one thing, (\\`) Warner Music Group is no longer part of Time Warner [] . For another, film is way too large to push over an AOL dial-up connection.

Re:All these big companies... (1)

Stonehand (71085) | more than 8 years ago | (#14179167)

AOL does have some efforts aimed at delivering video content. As broadband grows and the company sees a need to shift to depending more on advertising revenue as well as premium services, it would not be entirely surprising if they did try to leverage the content library. [] []

You'd be right, however, in that the company is organized into separate business units -- which do not necessarily see eye-to-eye on everything.

Very bad analogy: TW is not a utility (4, Insightful)

postbigbang (761081) | more than 8 years ago | (#14178112)

There is no dependent public service on Time Warner. All they things they do, especially in media, can't be considered in the same way that the monopoly of AT&T and their FCC and PUC/state-governed telephony was.

These two aren't equal; they aren't congruent, they aren't even parallel.

Time Warner's broadband properties are not a utility, like water, sewer, electricity, or natural gas-- things you can't live without. They don't have the same history, the same economics, the same monopoly control, the same easement and right-of-way capital assets, and so on.

Therefore, garbage-in, garbage-out. The comparison is null, and it is, unfortunately moot.

Re:Very bad analogy: TW is not a utility (0)

Anonymous Coward | more than 8 years ago | (#14178264)

These two aren't equal;
they aren't congruent,
they aren't even parallel.

Time Warner's broadband properties are not a utility,
like water, sewer, electricity, or natural gas
-- things you can't live without.
They don't have the same history, the same economics, the same monopoly control,
the same easement and right-of-way capital assets, and so on.

These two aren't equal;
they aren't congruent,
they aren't even parallel.

garbage-in, garbage-out.
The comparison is null,
and it is,
unfortunately moot.

Beautiful, what were you saying?

Re:Very bad analogy: TW is not a utility (2, Insightful)

postbigbang (761081) | more than 8 years ago | (#14178308)

Comparisons to the Ma Bell breakup don't work here; that's the point.

Icahn is trying to up his asset. Ma Bell was a utility, and a monopoly. Time Warner is neither.

Time Warner has diverse media and manufacturing assets, and while they have content generation and distribution, they're not a monoply in any of the areas of their business, like Ma Bell was.

A breakup in this case, has no useful metaphor to Judge Greene's breakup of the AT&T components into different companies. The only common denominator between the two, is that the fact that they were broken up to increase shareholder value. Other comparisons aren't valid. This is an economic issue, not one with parallels.

Comparisons that try to link the two in that way just don't work-- TW's asset structure, business model, governmental regulatory control, and every other facet between TW and AT&T are different. Really different. The supposition of the post tries to presume that tie, where no tie exists.

Re:Very bad analogy: TW is not a utility (1)

Shakrai (717556) | more than 8 years ago | (#14179732)

Ma Bell was a utility, and a monopoly. Time Warner is neither.

You don't think that internet access qualifies as a utility? Maybe not in the classical sense of the word but I think you could make an argument that internet access is just as essential in the 21st century as telephone was in the 20th. In many areas Time Warner has a monopoly on broadband internet access. In many other areas they have a complete monopoly on internet access, because your only dialup option is AOL.

Furthermore they are pushing out into telephony with the rollout of their digital phone VoIP product. While on the surface I don't think this is a bad thing (it's about time the telcos got some competition) it does really bother me that their product isn't as reliable as POTS but they pass it off as though it is. It's also just plain damn unfair that Time Warner hasn't been asked to pay any extra licensing or franchise fees for telco services -- but in areas where Verizon has rolled out video over the FiOS network they have had the municipalities come after them for francise fees -- with Time Warners backing.

No, Time Warner isn't Ma Bell just yet. The point that I wanted to make and the discussion that I wanted to see was they might be heading in that direction and what can be done to stop them without ruining competition?

Re:Very bad analogy: TW is not a utility (1)

postbigbang (761081) | more than 8 years ago | (#14179898)

Casting TW as AT&T just doesn't work. Here's why:

1) AT&T and Western Electric were a monopoly, as in NO ONE ELSE GETS TO PLAY. CPE, as in phones, PBXs, and so on, were 100% controlled until PBXs broke loose, then the Green Decision to break them up. Their various groups were split into pieces that followed business unit logic: Lucent, AT&T Long Lines, and so on. History marks this

Time Warner, on the other hand, is a media empire with broadband holdings. In some areas, BrightHouse and other subsidiary divisions provide entertainment/TV Cable, and adjunct to that, broadband access. Their penetration is good in the US, and the US only. AOL was once the king of dial-up. No more. Dialup isn't a good situation. But as you can live without a phone, you can live without broadband access. Cable TV is like a utility, and uses utility metaphor, and has been promoted legally to the sense of a utility in a handful of markets.

But TW has serious competition in each business segment. Comcast, Adelphia, not to mention Verizon, SBC, BellSouth, and so on. AOL has competition: MSN, Google, Yahoo, and numerous others. TW publications have competition across the board. Their publishing unit has excellent and cogent competition across the board. THIS IS NOT A MONOPOLY.

2) I applaud the breakup of TW for numerous reasons. It will make Brighthouse stronger, and not beholden to the rotten cash problems that TW has. TW has demonstrated time and again that they're not leaders, and barely followers in this area. AOL needs fresh blood and new ideas. Their business model made sense when broadband build-out was small and spotty. It's not anymore. The added value needed for AOL would be to buy something like MySpace and add put it on the google revenue model. But AOL is leaden, and Steve Case is gone, and I think personally that they'll slowly lose share until they croak or are sold off for assets.

3) There are no other parallels that exist in the comparison. It's ok that to say, "gosh, bad idea". I have to do this, too.
If you want to have a discussion on the problems of national broadband inconsistencies, or how publishing content and revenue models now have become divorced from providers, or how IPTV will disrupt the living hell out of everything, then lead on. But it's an apples vs durian discussion here. They might be both businesses, but it really stops there. And like durian, AT&T stank.

4) Competition? Every telco. Every cable company. Every magazine/book publisher. Every content generator. There is no current problem with broadband competition. There may be as, like the recent 2600 Magazine cover implies, a new Bell, as they seem to re-unite again. But the telcos are only now putting in fiber, and worse, passive fiber. The last mile is still an open book, and the chapters are by no means written yet.


If cable isn't a utility then nothing is (1)

tepples (727027) | more than 8 years ago | (#14178459)

Time Warner's broadband properties are not a utility, like water, sewer, electricity, or natural gas-- things you can't live without.

People lived without indoor plumbing and indoor power for nearly six millennia.

They don't have ... the same easement and right-of-way capital assets

Really? You try to start a new cable company in your town and see how far you get.

Re:If cable isn't a utility then nothing is (1)

postbigbang (761081) | more than 8 years ago | (#14178659)

Ma Bell, when she was an aggregate whole, had over $4B in assets in 1972 related to ROW, easements, and property that was a sanctioned utiility monopoly.

Time Warner has assets, that in 2005 dollars, are but a fraction. Indeed most of their distribution infrasturcture rides other utility ROW and easements. They are by no means a monopoly, although they do enjoy franchise status in numerous areas. That franchise can be revoked if the company is re-capitalized. Federal law also supports numerous re-examination possibilities when they recapitalize, or alter their structure, or are merged. It's non-trivial.

Equating it to the break of Ma Bell just doesn't stick to the wall. The issues are just not the same. I analyze the comm/telecom industry deeply. Regretfully for the poster, they aren't equivalent, not even slightly.

still a void compare - publishing monopoly is evil (1)

twitter (104583) | more than 8 years ago | (#14179734)

You try to start a new cable company in your town and see how far you get.

Try to start any kind of 21st century publishing company and see how far you get. Cable carries everything that paper and radio waves once did and will soon take the place of public libraries. Can we really afford to give the same kind of control to this new media that we gave to Radio and phone companies based on conditions and limits that no longer exist?

The last mile barrier must be broken by re allocating existing bandwith. Using demonstrated technologies, there is no bandwith shortage now or ever again. Many social problems can be solved by eliminating wasteful allocation of useful radio spectrum. Such a move will destroy the companies that were built on creating that last mile in the first place. They are no longer needed because the last mile can be bridged without granting exclusive control over it. The net social gain will be many times larger than the loss of obsolete services.

Will you finally stop using AOLserver ? (1)

axonis (640949) | more than 8 years ago | (#14178116)

This does this mean that the new split off and to be aquired AOL divsion and the community will finally stop using the open source AOLserver [] with its embedded TCL support. Its used on a number of core AOL sites and also supported by OpenACS [] .

Carl Icahn was on CNBC Friday (taped) (1)

dalan (462305) | more than 8 years ago | (#14178117)

He said that according to his calculations, he would get AOL for free in a break up.

Start by making fewer assumptions? (3, Insightful)

djupedal (584558) | more than 8 years ago | (#14178127)

"What can be done to protect consumers without stifling the technological innovation that we all know is so important?"

Start by making fewer assumptions...
Assumption #1: Technological innovation as you perceive it actually happens.
Assumption #2: Consumers are protectable and/or need to be protected.
Assumption #3: Consumers want current content.
Assumption #4: Consumers are the ones being protected.

TV was called the 'boob' tube, for good reason, long before the phrase 'innovative technology' was coined. You seem to think content mega-control by corporations is new on the's not.

Consumers aren't quite the idiots you think they are - by your logic, a small group of people enjoying an ad-hoc musical performance in Central Park are neither consumers, nor are they being exposed to 'content'...wrong. Just one example - there are hundreds more. Point is, consumers can protect themselves, thank you very much.

As for protecting anyone...the corporations are the ones interested in protection.

Despite your fantasies, most technological innovation comes from good old fashioned war. Faster information gathering; better medical procedures; increased creature comforts...the biggest upswings in tech advances have always been associated with some type of major military activity.

Real innovations occur as distanced events in terms of any form of consumerism or content protectionism, and they will never be subject to any threat (first amendement or business model related) that is simply based in the marketplace. Just ain't gonna happen...

All Gall is divided into four parts (0)

Anonymous Coward | more than 8 years ago | (#14178242)

(Ok, Julius Caesar said three but there's been inflation since then.)

Microsoft (0, Offtopic)

hachete (473378) | more than 8 years ago | (#14178253)

I've always thought that MS was way too diffuse. Just what is it's business? Just what does it want to do? "A PC on Every Desk Top". Is that still its statement? If so, it's looking more out of date by the second.

He can do for TW what he did for TWA (1)

weave (48069) | more than 8 years ago | (#14178299)

Carl Icahn loves to gut companies and personally profit from the carnage. He took over TWA and drove them into the ground while profiting greatly from the fun. True, they were in trouble when he took it over, but his goal is never to fix a company, but to profit from the chaos. Kind of like a payday loan store, he does offer a service to those desperate for cash, but it's not about helping them rise out of debt. He provided the same "service" to Texaco.

How do you think he got the handle "Corporate Raider?"

Re:He can do for TW what he did for TWA (1)

Guido von Guido (548827) | more than 8 years ago | (#14178399)

Absolutely. Icahn is not motivated to make Time Warner run better. Icahn is motivated to make money off of the deal, since he stands to make a great deal of it.

Re:He can do for TW what he did for TWA (0)

Anonymous Coward | more than 8 years ago | (#14178539)

Absolutely. Icahn is not motivated to make Time Warner run better. Icahn is motivated to make money off of the deal, since he stands to make a great deal of it.

You need people like him around to keep things efficient -- Carl wouldn't be going after AOL-TW if there wasn't an opportunity to make a lot of money.

Re:He can do for TW what he did for TWA (1)

Guido von Guido (548827) | more than 8 years ago | (#14178698)

The thing is, Carl Icahn makes money regardless of whether or not AOL-TW becomes more efficient. It's entirely possible that one or all of the parts of the former AOL-TW end up worse than they did before, but Icahn will still make a profit.

Learn from Sony (2, Interesting)

Hao Wu (652581) | more than 8 years ago | (#14178466)

Why would you make 'Content creation' and 'Content distribution' two different divisions?

That's what SONY did, and they are constantly battling each other because their core interests directly conflict.

Re:Learn from Sony (1)

Scudsucker (17617) | more than 8 years ago | (#14178815)

I think you are confusing "content distribution" to mean "consumer electronics", when that's not the case. Distribution means working with shipping, advertizing, and retailers, and works well with the content creators so long as the distributers can't tell the creators what to do.

Electronics is a whole different ball of wax. That part of Sony wants to sell the most electronic gear, while Sony's content arm wants to cripple the hardware to prevent copying.

As Time Warner isn't a big manufacturer of consumer electronics, I don't see them having this kind of problem.

Microsoft line now common wisdom? (1)

kronocide (209440) | more than 8 years ago | (#14178475)

What can be done to protect consumers without stifling the technological innovation that we all know is so important?

Has this Microsoft line become common wisdom now? Assuming that technological innovation is that important, it still does not need huge conglomerates to happen.

Failure of central planning (1)

patternjuggler (738978) | more than 8 years ago | (#14178484)

It's one of those contradictions of our business system- in a capitalist system resources are allocated through the market which kind of aggregates and handles the whims and desires and needs of the consumers and producers involved effectively, but then you have centrally planning as operated in say the Soviet Union where a rigid hierarchy decides how to move resources around, although there are still external market forces from competing capitalist societies, other central planned but independent countries, and what not. The thing is, companies in capitalist system internally operate with central planning, which is fine on a certain scale but the larger they get the larger the amount of resources in the nominally capitalist system are being allocated in non-capitalist ways, and I think everyone suffers from a less effective market as a result.

Polypoly (3, Insightful)

Doc Ruby (173196) | more than 8 years ago | (#14178577)

When the US monopoly decision on Microsoft was official, and the "remedy" phase was at hand, many of us discussed the merits of splitting MS into nonmonopoly units. The MS "vertical" monopoly, its stack of OS/app/dev/content that excluded competitors in fact and overwhelming advantage, was fundamentally anticompetitive. So we talked about the benefits of splitting it into at least those four units, (maybe a fifth for "other", or maybe a sixth for "networks" including Comcast shares and the like). Then requiring they make partnerships on a nonpreferential (to each other) basis. There was consensus that the resulting sum of the divided parts would be worth more in stockmarket capitalization, revenues and penetration of other markets, whicle leaving lots of large niches in which other companies could compete, even a chance for other (or new) companies to seize leadership, or for units to (gasp) go out of business if they couldn't compete on merit.

Instead, the most popular remedy suggested by the most influential spectators, the Wall Street Journal crowd, was "horizontal" split into smaller microcosms: MS1, MS2, MS3 - just cut them down to size, retaining all the same operations, and fight each other. FWIW, does anyone even know what the MS remedy actually was (is), other than oversight by a nanny judge? And how the new regime compares to the old in specific metrics accepted by the judge who determined MS was a monopoly? In any event, MS is still an anticompetitive juggernaut, as subsequent state monopoly lawsuits demonstrate, as well as the news in any given month, and especially to anyone trying to actually compete with MS even in their areas of vapor competence.

This is, of course, exactly the same pattern as the paradigmmatic monopoly breakup: AT&T. The "Baby Bells" were little "Ma Bells", regional monopolies which were smaller, but just as anticompetitive. Until cable companies like Time Warner recently started offering phone service, they continued their local service monopolies. Though long distance immediately became competitive - the AT&T monopoly action was brought by MCI, which found it couldn't compete with a monopoly, regardless of its merit. The MS monopoly decision also was the result of a competitor bringing action: Netscape, which claimed (correctly) that MS violation of a prior court consent decree not to bundle IE with Windows illegally interfered with its ability to compete. Netscape, of course, was bought up by AOL by the time of the monopoly decision, as the anticompetition took its toll, while AOL also bought Time Warner, as people believed (among other fantasies) that the AOL combination could compete with MS better than Time Warner could, especially if it was also Time Warner, and once MS was divested of its monopoly advantage. That turned out to be wrong, in several essential ways.

But recall that the vertical split was believed to offer greater collective return to shareholders. And that it would offer the benefits of competition to consumers, from price to quality, as well as market opportunities for vendors. Icahn apparently believes that is the case. Bill Gates, an even larger holder of MS shares than Icahn is of TW shares, has the benefit of a single manageable empire to compensate for the tradeoff of potentially more $billions in returns on his shares. Is there a good example of a monopoly, especially a tech one, that was split into its vertical components? Bundling is the most powerful competitive tool, short of IP monopoly, in the tech business. It seems clear to many people that vertical splits are the proper remedy to protect the market, and even benefit shareholders at the ego expense of executives. Which ones can we study for actual market results, and compare with these others, which have gone the other way - and usually remain monopolies in different guise?

Zzzzzz..... (1)

macthulhu (603399) | more than 8 years ago | (#14178595)

I work in video production for Time Warner Media Sales, which is part of Time Warner Cable... This rumor has been floating around our hallways for years. We all lament the AOL merger, not for their lack of profitability or sheer lameness, but because their corporate culture was sooooo different than ours. For example, AOL doesn't do their own video production, so their IT policies are way out of whack with running a production company... Plus, due to the questionable accounting practices at AOL before the merger, the corporation's main focus seems to be compliance with the Sarbanes-Oxley Act. That's fine, but let the bean-counters deal with that. I can't speak for the rest of the company, but I think breaking up into those divisions would be good for us. We stayed profitable throughout the last few years, despite any trouble that AOL and the others were going through. Anyway, the traditional end of the year story on the impending breakup of TW is not anything new.

Innovation and Size (1)

adoarns (718596) | more than 8 years ago | (#14178658)

What can be done to protect consumers without stifling the technological innovation that we all know is so important?

Technical innovation from a company like Time Warner means DRM, shitty media players that force you to watch commercials and pay for bundled crap, and AOL.

I'll take my chances with the innovations offered by smaller companies.

Carl Icahn, "Corporate Raider" (2, Informative)

putko (753330) | more than 8 years ago | (#14179339)

This is may or may not be good for consumers -- but it will make Mr. Icahn some money. An understanding of who Carl Icahn is, and what he does, may help.

Carl Icahn is an old guy (born to a middle-class Jewish family in Queens, NY). He makes his money by buying controlling interests in firms and reorganizing them in ways that increase the share price. In this regard, he and other corporate raiders have made American capitalism work more the way it is supposed to (according to the law). Sometimes they've broken the law, and screwed over minority investors; clearly that's awful

The methods of someone like Carl Icahn produce anger, hatred and even anti-semitism -- even though what he does is consistent with American law.

The basic idea of "corporate raiding" is to get enough of a controlling interest in a firm that the raider can convince the board to let him break the "unwritten" rules of American capitalism, for the benefit of the shareholders.

For instance, at big firms, younger employees used to get paid less than at other firms, but had job security. When they got old, they still got paid, even though the company would have been better off without them. Also, often the pension funds for the workers contained more money than they were required to have by law. That money could instead go to shareholders.

Doing those things rubs a lot of folks the wrong way, but that's usually because they imagine that a company has a duty to its workers -- which, in America, is not the case. The company is only beholden to its owners. Until the law changes and the owning class is disposessed, that's the law (and please remember to call me when the revolution happens, guys). Carl Icahn's brilliant ideas, among others, were to fire the older workers and give the extra pension fund money to the shareholders. Perhaps a little "creative accounting" allowed him to give more and then some. This was great for shareholders.

The bosses running American companies had always been legally able to act like Carl; they just didn't have the chutzpah to do it. The American system was less meritocratic, chummy and run by whites.

The corporate raiding could have happened in the 60s or 70s, but banks wouldn't loan money to outsiders like Carl Icahn and his fellow corporate raiders. Without the money, they couldn't buy a controlling interest in a firm and reorganize things.

The banks didn't loan to folks like Carl partly out of self-preservation: by loaning money to people like Carl Icahn, they'd be alienating the other bosses of the companies they served, and that could result in them getting cut out of routine transactions that were their bread and butter.

E.g. if a bank helped Icahn to to a takeover, it would lose some business customers, because pissed off company bosses would withold their company's business -- even if the bank had low rates and not using them was bad for the shareholders!

The reluctance of bankers to loan money to corporate raiders changed in the 80s when Michael Milken, working at Drexel, Burnham and Lambert, appeared on the scene. With high yield bonds, he had the money from investors. Michael and his bank (Drexel, Burnham and Lambert) was willing to loan money to corporate raiders, because the Jewish bank (that's not meant to be "antisemitic" --- but just a statement of who owned, ran and staffed the bank) didn't have much corporate business to lose.

As documented in the book "Predator's Ball", by the Jewish journalist Connie Bruck, to a man, almost all of the corporate raiders and bankers who provided the money were Jews with roots in Poland or Russia. A number of things came together: they were intelligent, hard working, insensitive to criticism, full of love for money (I don't want to use the word "greedy" in connection with "Jews", lest I be accused of "antisemitism" by the hypersensitive), able to do business with each other (genetic relatedness helps people to establish trust) and uncaring about the needs/feelings of the employees of the companies that they raided.

A similar situation occurs with the Chinese Diaspora -- outside of Japan and Korea, the Chinese dominate business in Asia (Thailand, Maylasia, Indonesia, Vietname, Burma, etc.). To the Chinese, the host populations seem stupid, lazy, violent and bad with money -- and there is much mutual animosity.

The Armenians and Greeks used to fill the same niche in Russia and the Ottoman empire.

The social identity aspects of things during the 80s takeover binge got extreme -- e.g. the outgoing gentile President of the cosmetic firm Revlon referred to the raider who took over the company that he managed as "the Jew from Philadelphia". Antisemites have often noted the Jewish origins of folks like Milken and Icahn.

It is not clear what "remedy" there is to the corporate raiding problem -- short of getting rid of our capitalist system, or restricting Jews (and other similar minorities) from participating in American society, we will have situations like these. Any cure would likley be worse than the disease -- but beefing up the rights of minority shareholders would clearly be a good idea.

Re:Carl Icahn, "Corporate Raider" (0)

Anonymous Coward | more than 8 years ago | (#14179772)

I fail to see how it is relevant to keep mentioning Judaism per se in connection with Carl Icahn. I'd say you were trolling, but trolls don't focus on one issue with such single-minded devotion [] . Chutzpah indeed.

Re:Carl Icahn, "Corporate Raider" (2, Interesting)

putko (753330) | more than 8 years ago | (#14180233)

Dear Anonymous Coward,

The fact that Carl Icahn is a Jew (as were/are with most of the participants in the takeover business) is quite relevant. Judaism (as a religion) has nothing to do with it -- but his ethnicity, and that of his peers was critical. I'm referring to the fact that most of them had great-grandparents from that lived within a few hundred miles of each other.

Their ethnic cohesion allowed them to run their enterprise successfully, and that enterprise both helped Jews and Israel, and hurt the goyim. What a mitzvah! The takeover game is something Jews should be proud of: Jews made so much money (so quickly!) at the expense of their goyische competitors. They unseated the WASPs whole industries. Jews got the money from the Savings and Loans, receiving the savings of an entire generation of Americans -- and that allowed them to make donations to Israel and other Jewish charities. Mazel Tov! And for the most part, the gentiles didn't catch on that it was Jews benefitting at their expense.

Here's something from the Washington Report on the importance of the ethnicity of the participants, and the phenom in general: kissues/0490/9004005.htm []

a nice excerpt:

"... A careful examination showed, however, that his public support for Israel, rather than being Jewish, was the key to how a figure of Boesky's prominence could, over a long period, corrupt so many Wall Street insiders without in turn being subjected to extortion or exposure.

He had selected as potential collaborators fellow Jews identified with pro-Israel charities. A recipient of his illegal overtures who might turn out to be too honest to accept Boesky's offers of money or stocks for insider information very likely would also be reluctant to report such an illegal proposition by an ardent, generous, and prominent supporter of Israeli causes. To do so might turn the informer into a pariah in what the Jewish press calls "the pro-Israel community."

Re:Carl Icahn, "Corporate Raider" (0)

Anonymous Coward | more than 8 years ago | (#14181317)

"Judaism (as a religion) has nothing to do with it -- but [ethnocultural cohesion] was critical."

Exactly, hence the "Judaism per se" in my response. So why write in such a manner as to emphasize his Jewishness, in terms of all those eyebrow-raising stereotypes you appear to be so eager to disclaim?

And not just here, but elsewhere as well:

  • "About 90% of these stores ... are owned by hasidic Jews. The cheating methods they use are standard practice."(#14115357) []
  • "I thought the Kazaa guys were the sort to do 'anything to win', including fairly Talmudic stuff like what they've already done." (#14112159) []
  • "If you've dealt with bankers (esp. 'New York' bankers [insider's code words for Jews]), you'll know why."(#14112934) []

I'm sure you don't think you're a bigot, but to everyone else, these sound like the old tired, banal arguments against the Jewish world conspiracy that were popular in the mid-20th century.

Re:Carl Icahn, "Corporate Raider" (1)

putko (753330) | more than 8 years ago | (#14181713)

You are purposefully dense here, but for the purposes of others who will read this, I will explain.

As I mentioned already, the religious beliefs of Jews, for the most part don't matter.

When Bob Dylan (nee Zimmerman) was a holy-roller Christian, he was Jew going through a phase.

When Trotsky, the atheist communist Jew, played chess in Vienna with capitalists Jews in Vienna, all that mattered was that they were from the same tribe, not their religion. Had ideology or religion mattered to them, they wouldn't have associated with each other. On the other hand, it is unthinkable that someone like Donald Trump would socialize with a communist, just because the person shared his ethnicity -- because Donald cares about ideology.

Jacob Schiff, a rich capitalist Jew who hated goyische imperialist Russia, helped communist Jews to take over Imperialist Russia. Why would a capitalist help communists to topple a country? Because ideology didn't matter to him -- just ethnicity.

With Jews, ethnicity trumps religion. E.g. the Lubavitchers (how I love them) would have gladly taken all of the above-mentioned Jews in and rehabilitated them. All that matters is that they were all ethnic Jews. You wanna make aliyah? Go right ahead -- you just need to show that you've got a Jewish grandparent. Your religion is immaterial. You can be an anarchist or Stalinist and make aliyah -- no problem.

On the other hand, if a non-Jew wants to become a Lubavitcher, the Lubavitchers will do all that they can to dissuade the guy. He's not welcome. Because ethnically, he's not a Jew. And gentiles can forget about immigrating to Israel; that's just not allowed. Yeah, you can convert and immigrate -- but that's pretty tough, and life won't be fun after you've done it. And if one day all the Arabs get smart and decide to convert to Judaism (so that they can take over the country), you can bet Israel will change the rules to stop them. Although if a bunch of Arabs were to convert in order to immigrate, I'd argue that they are Talmudic enough and belong "in" -- that sort of creative problem solving should be encouraged.

Of course, religion matters when talking about "posses" that are competing. E.g. Satmars vs. Lubavitchers. But these differences don't matter much, especially if there's something to gain by cooperating against other "outsiders" -- e.g. securlar Jews or goyim.

Given that ethnicity is so important in human affairs, and to the extent that the ethnic stereotypes are rooted in factual observations, I feel my statements are reasonable, if perhaps politically incorrect. If you want me to stop pointing out that the facts fit the stereotypes, I suggest you somehow try to get people to act less stereotypically.

been there done that (1)

josepha48 (13953) | more than 8 years ago | (#14179374)

.. it was called AT&T.. it was broken up and now it seems to be piecing itself back togeather again.

Problem is that if it gets broken up now, and it is forced to be broken up, it will only try to get back to its original size. It will be good for a few years, and then it will put itself back togeather again. Nice idea though. How does one stop megamonopolies?

obLatin (1)

smellsofbikes (890263) | more than 8 years ago | (#14179764)

Omnia AOL in quartuor partes divisa est.

Wasn't this written down some place? (1)

franktinsley (865199) | more than 8 years ago | (#14181908)

And the male of the goats, for its part, put on great airs to an extreme; but as soon as it became mighty, the great horn was broken, and there proceeded to come up conspicuously four instead of it, toward the four winds of the heavens. - Daniel 8:8
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