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February 06, 2005
AOL, Five Years Late Again
Last week AOL and Time Warner Cable announced that they were joining forces to provide a customized broadband offering. The two companies will offer existing AOL dial-up and Time Warner Cable Road Runner subscribers "attractive pricing" that would allow current Road Runner broadband subscribers to have AOL as their primary portal to the Internet and have access to AOL's rich content.
In the joint press release, Don Logan, Chairman of Time Warner's Media and Communication Group, said, "This new agreement aligns the strategies of America Online and Time Warner Cable in the fast-expanding broadband sector, and it will enable each business to focus on its key areas of growth. Time Warner Cable should accelerate its acquisition of high-speed data subscribers, while AOL should enhance the lifetime value of its member base and maximize its revenues from online advertising, search commerce and select premium services."
What total bullshit. This announcement is exactly five years too late. It should have been made by Steve Case as soon as the AOL/Time Warner merger was announced. The horse is out of the barn now and two states away.
First, AOL has a much-touted strategy of increasing the content of its free portal to attract more traffic and, thus, advertising revenue. Well, if you can get AOL's content free, without subscribing to AOL for $23.90 a month, then why would you need to pay for AOL content? Second, when you have always-connected Road Runner, you don't need AOL, which is primarily an ISP--a connecting device-- so people who have Road Runner are cancelling AOL by the hordes, of course. AOL's left hand is arm wrestling with its right hand--some strategy.
What has been the effect of the announcement on AOL morale? It is rumored that inside AOL the mood is glum because many AOLers see the announcement as a move to make AOL more attractive to a potential buyer.
Posted by Charles Warner at February 6, 2005 12:24 PM
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Comments
Phil Frank at March 28, 2005 01:25 PM writes:
Charlie, was thinking about this entry the other day and recalled a "hurdle" the government put in front of AOL and Road Runner when this merger was first approved. I may not have exactly right, but it was something like this...Road Runner can only offer AOL on it's service to any given market, once it has begun to offer two competitive internet offers. I believe that Case, Pittman and anyone else at the time would have brought these two entities together much sooner if they had been allowed. Feel free to check me on this, but I believe the above is correct.
Charles Warner at February 9, 2005 11:34 PM writes:
A friend sent me the following e-mail (anonymously, obiviously):
"Well, I can't reply to this one less I find myself out of a job, but "What total bullshit" has to be my favorite Media Curmudgeon quote so far! And by the way...the rumor mill has it that AOL lost another 400K subs last quarter. So much for the strategy brain trust."
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