Management Issues of AOL Time Warner

America Online was founded in 1985 in Dulles, Virginia. America Online is the world's leader in interactive services, Web products, Internet technologies, and e-commerce related products and services. America Online operates with two worldwide internet services: America Online, with members exceeding 20 million, CompuServe, with more than 2.3 million members and several other important Internet brands. Today, worldwide membership of the AOL service has crossed 29 million and members are averaging almost 70 minutes onlin

On January 10, 2000 America Online and Time Warner announced a merger to build a completely integrated media and communications company for the Internet generation in a stock combination valued at $350 billion, named AOL Time Warner with total revenues exceeding $30 billion. The merger combines Time Warner's enormous range of media, entertainment and news brands and its advanced broadband delivery systems with America Online's widespread Internet services, technology and infrastructure, including premier consumer online products, a huge community in cyberspace. Currently AOL Time Warner operates in 18 countries. Steve Case, chairman of the board of AOL Time Warner, stated during the merger:

Steve Case plays an important role in building and leading AOL Time Warner, focusing mainly on the developments and policy initiatives driving the worldwide development. Richard D. Parsons, previously Time Warner's President, is now AOL Time Warner's CEO. He sets the company's plan and handles the management related issues of the company.

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Less than three weeks after approval of its US$106 billion merger, media leader AOL Time Warner fired 2,400 employees. According to Time Warner these changes will enhance the focus of company, capture synergies for development and strengthen the integration of company. Hardest hit by the cutbacks were staffers at Time Warner properties, including 600 of the approximately 14,000 employees at Warner Music Group Division.

At Time, Inc., 400 of the division's 13,000 employees were fired. According to reports, no cuts were made in editorial staff and most of the employees that were fired belonged to subscription services and direct marketing staff. Although the major cut offs were from Time Warner divisions, 725 staff members at America Online also lost their jobs. This represents approximately 5 percent of the division's workforce of 15,000 before merger (2). For the remaining employees, the AOL Time Warner offered stock options as an encouragement.

Department heads and managers in the past were given cash rewards based on their performance. Now, the heads will receive only stock options. According to AOL Time Warner there are many reasons for lay offs, including restructuring the company management, cutting the over heads, reducing company operations cost and slow pace of internet and entertainment market.

Shortly after these layoffs, AOL Time Warner reported that combined salary and bonus of the company’s 6 highest paid executive officers had risen between 8.9% and 25.2% during the previous year, with the average officer getting a 16% increase in salary and bonus. Whereas AOL Time Warner failed to meet its stated financial goals, so an additional layoff of 1,700 employees was announced in August, 2001. These cuts reached across the whole company, requiring several remaining employees to take additional duties and learn new skills.

Andrew Heiskell Community Service Awards

Established in 1982, the Andrew Heiskell Community Service Award recognizes employees who make outstanding contributions to public service, equal opportunity and human rights while performing at their best during their careers. Awards are presented at a ceremony in New York each June, where winners get an award scroll and a $2,000 prize. The company also donates $3,000 to a charity of the winner's choice (3).

ECHO (Employees Caring and Helping Others)

AOL Time Warner recently launched an employee benefit program called ECHO (Employees Caring and Helping Others) to encourage all employees of the company to give something back to the communities in which they live and work. Using ECHO, employees can learn more about their, connect with volunteer opportunities in their area, join a company-sponsored volunteer plan, or make an online donation to a favorite charity. AOL Time Warner employees are also encouraged to participate in the ECHO Grant Program, which provides grants of $500 and $1000 to employees and teams of employees who volunteer in their communities (3).

AOL Time Warner offers a range of employment positions in many areas including Internet services, networks, publishing, filmed entertainment, cable systems, music and interactive video, within the United States and around the world. AOL Time Warner is an equal opportunity employer and employs only qualified experienced individuals based upon job related qualifications without any concern of religion, race, color, national origin, sex, disability, age or any protected characteristic. AOL Time Warner also complies with the laws about reasonable accommodations for individuals with disabilities.

A significant part of the Company's strategy plan in its businesses is to maintain increasing revenues from advertising and business sources and from the sale of company merchandise, as well as from further sources such as transaction and licensing fees. AOL Time Warner continues to maintain a large variety of relationships with advertising and business partners to expand its non-subscription based revenues.