Actually it made perfect sense and still does. AOL at it's heart was a content company. It was the same business as TW, selling adverts inside of content vehicles. The gem of AOL was that they had new and more capable channels than TW had organically. Had TW embraced AOL instead of feeling threatened by it, it would be a very different world. Instead of advertisers and content companies feeling threatened by things like Tivo, Google, and Napster - they would've embraced those channels and exploited their additional capabilities - like one-to-one marketing and personalized segmentation.
Instead what you got was TW business leaders, wounded because their stock wasn't valued as highly as AOL's, getting bitchy because AOL didn't have strong revenue streams yet. I emphasize 'yet', because as we all know, old media is fading away pretty quickly now. When was the last time you read a newspaper? Or better yet, when was the last time you looked at an ad or classified in the newspaper? Those revenue streams are irrevocably changed and AOL's model was the correct one. It's just that the management at TW wasn't ready to concede that.
To make matters worse, AOL still had a large faction that thought it was a technology company. When you have software development, large Internet infrastructure, and media development listed as a 'core competency' when you're really a content company, it's easy to see how the TW people were successful at proving that AOL didn't know what the hell they were doing. Those lines of business, if they even generated revenue at all, should've been discarded before the merger. Some of them were, but not all of them. I think that would've provided clarity in the ranks and made AOL more nimble.
The time wasn't right. Way too early. AOL was (and is) doing a crappy job of pushing from dial-up to broadband, and IP based television was nowhere near ready to go. The content channels that TW had the ability to really leverage into the puzzle were not ready to fit in that puzzle. Everything else should have just been licensed, as it was before the merger. They were not able to accomplish anything other than the complete obliteration of shareholder value. It was a really bad move, that only looked good on paper. They both would have done better if they stayed separate.
