Monday, January 04, 2010

First off, happy new year.

FT.com's Andrew Edgecliffe-Johnson, who in writing about the AOL-Time Warner merger, says " (former Time Warner CEO Levin) having avoided apologizing for the billions of dollars destroyed by the deal...".

But the 'deal' did not destroy billions of dollars. While Time Warner shareholders suffered as a result of getting stuck with AOL, AOL shareholders benefited by the (likely) same amount as their AOL holdings were bolstered by the value of the Time Warner assets. Without the merger, AOL shareholders would have suffered a catastrophic drop in the value of their holdings.

It would be more accurate to say that Time Warner shareholders suffered a loss in the billions of dollars.