A New Net Equation

One lesson of the AOL Time Warner deal: Profits matter after all

First came the explosion. After America Online Inc. and Time Warner Inc. announced plans to merge on Jan. 10, their combined market capitalization plunged by $10 billion in three days. AOL shareholders howled that they would be saddled with a slow-growing old media company, while Time Warner stalwarts questioned the value of shares in a brazen young company that not so long ago was derided as America Offline. The collision of Internet believers and skeptics was a little like the interaction of matter and antimatter: blammo.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.