Time Warner and AOL announced a stock-for-stock merger
this morning. As part of the deal, AOL Chair Steve Case was
named Chair of the merged company called AOL Time Warner
Inc., while Time Warner CEO Gerald Levin was named CEO (THE
DAILY). On "Early Edition" this morning, CNN's Carol Lin
reported: "A merger of giants is among them. ... AOL is the
world's largest Internet provider and Time Warner ... is the
world's largest media and entertainment company. The deal
is worth a reported $350 billion. Analysts say it will have
a huge impact on both industries and on consumers" (CNN,
1/10). The WALL STREET JOURNAL's Peter Gumbel reports that
AOL shareholders "are likely to hold a majority stake" in
AOL Time Warner of just over 50%. AOL, which has more than
19 million subscribers, has a market cap of about $164B,
while Time Warner has a market cap of $83B (WSJI, 1/10).
WHAT IT MEANS: On TheStreet.com, James Cramer writes
the deal "validates all of these seemingly wacko valuations
from the Net, admits that old media has been surpassed by
new media, and says that content will be delivered primarily
on the Net ... in the very near future" (TheStreet.com,
1/10). Bear Stears' Scott Ehrens: "From AOL's standpoint,
they get access to a large audience that's not already
online that is touched by Time Warner's other media
properties. ... From Time Warner's standpoint, it gives them
an Internet strategy" ("Morning News," CNN, 1/10). CNN's
Technology Correspondent Rick Lockridge discussed the first
manifestations of the merger: "Within the next few weeks, I
think you might start to see conspicuous links to Time
Warner Web sites" ("Early Edition," CNN, 1/10).
