It's hard to imagine now, but AOL was once the biggest name on the Internet, the Google of its day. In the age of dial-up Internet connections — Beeep! Whirrrr! Shhhhh! — AOL was the portal through which most Americans went online, with as many as 35 million subscribers at its peak in 2002 [source: Rosenwald]. AOL was a Wall Street darling, flush with investor cash and looking for a prestige purchase.
AOL Inc. CEO Steve Case met Time Warner CEO Gerald Levin in 1999 and the two men immediately began daydreaming about a merger between the biggest names in old and new media. After months of private talks, the corporate marriage was announced on Jan. 10, 2000, to ecstatic media coverage. At $350 billion, it was the largest merger in the history of the business world [source: Arango].
But even after gaining Federal Trade Commission approval, the deal had its skeptics. AOL was the majority shareholder, and for the financials to add up, AOL would have to continue making bundles of money in advertising revenue. Before the ink was even dry on the deal, the dot-com bubble had burst, Internet stocks plummeted, and the bottom fell out of the online advertising market. To make matters worse, increased availability of high-speed Internet access cut deeply into AOL's dial-up revenue [source: Arango].
The merger proved poisonous for both companies and downright deadly for investors. About $100 billion in stock value was wiped out [source: Arango]. In 2009, Time Warner spun AOL off as its own company. Today, the AOL-Time Warner marriage is the standard business school case study for the worst merger ever.