Battle of the Synergies
Copyright Jack Mixner. 714 449 1040. www.mixnerstrategy.com
The dot.com boom brought us one of the marriages of the century founded on the convergence of print and electronic media and reliant on synergies in marketing. AOL and TimeWarner were supposed to be perfect for each other. What went wrong?
AOL assumed there were synergies. Jerry Levin, CEO at Time Warner, apparently bought Steve Case's case for the merger (and synergies) hook, line, and sinker.
AOL's head of sales Robert Pittman assumed that on the day of the merger, entree to TimeWarners trove of main-line advertisers would be automatic. AOL's sales operation was a boiler room operation focusing on the "dregs of advertising" (Munk, 231) while TimeWarner focused on a long sales process trolling long term for "high-class, major advertisers". Pittman assumed that TimeWarner would be forced to share their 100 top clients and that they were all perfect for incorporation into the AOL way.
Everybody was wrong. AOL shortly imploded - the dot.com bust didn't help - and TimeWarner was left holding the bag.
Synergy is tricky. It assumes that, at a minimum, folks can just get along. Levin had negotiated in secrecy. His team, when it found out about the imminent merger, was totally unconvinced. Things went downhill from there.
Keys to success? Openness. Communication. Involving customers. Bigger things like including the whole management team in decision making and keeping the Board informed and on your side would have helped, as well.
Reference
Munk, Nina. Fools Rush In. Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner. HarperBusiness. 2004.