The Bubble Bursts

Arrival of the third millennium was accompanied by the $183 billion merger of America Online with Time Warner, which Business Week hailed as "a new kind of conglomerate whose very existence will likely change the contours of information and entertainment media—digital and otherwise." ¹ The magazine's cover featured New Economy titans Bob Pittman and Steve Case—both from AOL—who had created the "colossus" that would "redefine the future." It was not to be. Within four months, fissures in the dot-com boom appeared that implosively led to its $7 trillion collapse. This scarred newly born AOL Time Warner, causing $223 billion of shareholder value to go up in smoke—$8 billion of which was suffered by Ted Turner, its largest shareholder. Business Week, quickly forgetting the lavish superlatives, dubbed it the "the worst deal in the history of misbegotten megamergers." ² In the flip-flop, the magazine replaced the cover photos of Case and Pittman—who were no longer in charge—with the face of Dick Parsons, the demure, surviving CEO charged with rescuing this poster child of the dot-com boom and bust. The prior titans unceremoniously exited as their jerry-built merger fell apart.