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The AOL-Time Warner
Soap Opera

The ongoing problems of AOL-Time Warner, which is a significant player in animation, seem to go forever. The company, which resulted from the purchase of Time Warner by Internet giant America Online in 2001, has been falling apart at the seams and has become the subject of much speculation and gossip. In short order, we have seen the successive resignations of Time Warner's Gerald Levin and AOL's Steve Case, who engineered the deal in the first place, followed by the angry departure of vice chairman Ted Turner; this was topped by the announcement the company would take a $98.2 billion loss for 2002, the largest ever by a American corporation. The loss was due to the decline in value of the AOL unit; and as the original deal was valued at $112 million, the merger can only be seen as a complete and utter disaster.

While the failure has been attributed by many to the collapse of the economy, it is also one of several victims, including Disney and Vivendi Universal, of the merger mania that stalked media giants during the last decade. (In one respect, Disney shareholders can be thankful that CEO Michael Eisner resisted Wall Street pressure to buy Yahoo!, that other Internet giant whose stock has taken a giant tumble.) AOL's handling of the combined company was a textbook case of how not to handle a merger.

Before the takeover, Time Warner was something of a house of cards, with each unit being operated as its own fiefdom; thus, animation was being produced by several different parts, including The WB, Cartoon Network, Warner Bros. Animation, Warner Bros. Classics and Warner Bros. Feature Animation. Though this seemed rather messy, it actually worked quite well. For instance, on paper, there was no reason for the Cartoon Network to set up its own studio and take away production of such shows as The Powerpuff Girls from Warner Bros. Animation; but in reality, the new operation has been very successful.

When AOL took over it sought to rationalize these and other discrepancies in the corporate structure; the trouble was these units were quite happy the way they were and often resented their new masters. This was not helped by AOL forcing all Time Warner companies to use their technology for their Internet needs; the problem was the technology was not up to the task and caused so many problems that the companies were told to go back using their old service providers.

The resentment expressed among the troops was made visible by Ted Turner's outspoken remarks. Pissed off by management incompetence and the sharp decline in the value of his stock holdings, he not only resigned but has been selling off all his stock. (He was the company's largest stockholder.)

The question is, how has this affected the company's animation operations? Warner Bros. Animation, which had taken over the failed Warner Bros. Feature Animation unit in 2000, has actually managed to keep the company active in the theatrical arena, despite the failure of Osmosis Jones. The unit kept its hand in features last year by hiring out its facilities to Sony to help complete Adam Sandler's 8 Crazy Nights. It is now in production on the animation for Joe Dante's live-action comedy, Looney Tunes: The Movie, under the direction of Eric Goldberg.

AOL put the Turner cable operations, including the Cartoon Network, under the aegis of The WB. The consolidation resulted in The WB dropping several major series, including Batman Beyond and the primetime Baby Blues. However, Cartoon Network essentially picked up many of the creative crew involved in the former and came up with its successful Justice League. It also helped reinvigorate adult animation with its Adult Swim programming block, which included putting on Baby Blues. The Cartoon Network also remains one of the few outlets where independent studios can get a fair hearing.

So, despite the continuing soap opera that is AOL Time Warner, it appears animation really hasn't done so bad for itself there.

— Harvey Deneroff
March 2, 2003

2003 by Harvey Deneroff


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