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Facing challenges from the growing Internet/Web and broadband industry in the late 1990s that was encroaching on its bread and butter dialup services and "walled garden" of content, on-line services provider America Online pursued a strategy of re-invention as a content and broadband giant by purchasing Time Warner in the year 2000 for a whopping $164 billion.
The merger, executed by AOL CEO Steve Case and Time Warner CEO Gerald M Levin, turned out to be a total fiasco, with the new company unable to capitalize on Time Warner's strengths. Total subscribers of AOL went from an estimated 30 million at the height of its popularity to less than just over 5 million in 2007, with no significant quarterly growth since 2002.
The company's market valuation has plunged significantly from a high of $240 billion to $1.66 billion as of August of 2011.
In 2009, shortly after appointing a new CEO, Tim Armstrong, AOL announced it would spin off Time Warner into a separate public company, ending a fruitless eight year relationship.
AOL has since gone on a New Media purchasing spree, including Patch, Techcrunch and The Huffington Post, which joins their other New Media properties such as Engdaget which it acquired as a result of its Weblogs, Inc. purchase in 2005.