Struggling to make ends meet, AOL Time Warner has scrapped plans to merge its CNN outfit with Disney’s ABC saying a deal would cause too many complications.
The media giant, which lost nearly $100 billion in value in 2002 and recently saw the departure of chairman Steve Case and vice chairman Ted Turner, said the CNN/ABC merger would have been too complex to handle at a time when its problems have multiplied.
When news broke late last year that AOL and Disney were contemplating the move to create a dominant news network in a saturated market, many questioned the wisdom of such a move and in a statement, AOL conceded the complications were too much to handle at this time.
“After careful review, it was determined that although there are great merits and possibilities to a merger of CNN and ABC News, for us, the potential problems associated with the completion of such a transaction, and the integration of these two distinct and great cultures was more than we wanted to pursue at this time,” AOL Time Warner said in a statement.
The Wall Street Journal reported that CNN’s boss Jamie Kellner broke off the talks in a telephone call with Disney’s Robert Iger.
For AOL Time Warner, the emphasis is on recovering from news that emerged from its recent quarter results which included a goodwill charge of $45.5 billion against fourth quarter earnings, mostly to reflect the lowered value of the AOL digital unit.
The financial loss whammy was accompanied by the news that Ted Turner, the temperamental media mogul who founded CNN was quitting as vice chairman.
Combined with the $54 billion asset-write down AOL Time Warner announced in the first quarter of the year (due to AOL’s lowered market value), the combined loss comes to just under $100 billion in goodwill write offs for 2002.
