AOL – Time Warner Merger Expectations January 2000 – AOL- extensive internet franchises, technology, infrastructure – TW – integrated communications, media and entertainment – $1 B in cash in – AOL Stock $92 ≥ $102 – TW Stock $ $138 ≥ $154 – Salomon - $114 per share, $500 B April $47 & $71. Buy turned to sell 1

AOL – Time Warner Merger At $350B largest merger ever. Process began informally in China in Case planning the deal prior? Post China call. Case had high priced stock to use in a deal. – Seeking targets through SSB – eBay and EA. Internet was still evolving. TW and Levin was pondering the digital age and had discussed merger with Yahoo’s Yang. 2

AOL – Time Warner Merger The “dance” and initial discussions in 1999 followed rather quickly visual synergy. Case was the “buyer” but both companies in negotiating mode. Agreement reached in VA – Dinner at Case’s – Merger of equals – Newco – 55% AOL; 45% TW – BOD equally balanced – Levin – CEO; Case – Chairman – Due diligence in NYC 3

The Deal January 2000 – all stock, no collar, breakup $5.4 B AOL ; $3.5 B TW. Completed later in year – value down $214B Curiosities – TW gives away 55% since AOL market cap double TW; AOL has 1/5 revenue and deal has fallen by $140 B. January 2001, market cap $276B 4

AOL – Time Warner Merger Deal announced January 10, AOL and TW Execs not happy. “dumbest idea” – TW – vision and values; AOL – opportunistic Media portrayal – mixed – Transformative or foolhardy? “AOL – Crown Jewel” Culture issues – tie (Case); no tie (Levin)?? Regulatory approval – lengthy and economist concerned but deal approved by FTC. 5

AOL – Time Warner Merger Unraveling? – Internet & dial up service. Ad $ slowed. – Culture clashes – did they really hate each other? – Summer 2001 and 2002 – financial issues AOL Overstated revenues – SEC investigation & Restated #s Impact of 9/11? Levin retires December 2001 – Was deal doomed from the start, dot.com bubble, rapid development of the internet, culture clash, execution or combination of one or more? – Ted Turner – lost $8B, 80% of worth and job. 6

The Final Step December 10, 2009 – TW “spins off” AOL. Both companies listed on NYSE. One share of AOL for every eleven shares of TW owned as of November 27, Tax free dividend except for “cash in lieu of” “Returned to our roots as leading content company”. “Focus on driving best possible performance” See website: How the AOL-Time Warner Merger Went So Wrong 7