At the time (pun intended) it was the largest corporate merger in US history. For some reason the lawyers were able to convince the shareholders that a merger of the two companies would be hugely profitable for them. Synergies would abound! Redundancies would be found! Efficiencies would know no bounds!
In fact, for a while, things went okay. But mismanagement can sometimes have a delayed effect that might take years to manifest. We’re quite in tune with that idea right now.
There’s some greater detail on Wikipedia.
All would be swell. The artistic types at Warner were assuaged knowing that CEO Steve Ross would be running the show after the merger.
Sadly, their captain fell ill and passed away less than one year after the deal was finalized. His successor would be the former CEO of Time, Inc, a fellow named Gerald Levin (emphasis on the second syllable as my dad always liked to remind me). His management style from running a publishing company, did not well-suit les artistes under the entertainment umbrella. You probably know about some of the fallout, although you may not know the story behind it.
Footnote warning: for an interesting comic book reference to the merger, check out Pepe Moreno’s 1990 graphic novel Batman: Digital Justice. As far as I know, this was one of, if not the very first, comic book created entirely on a computer. About halfway through book there is a full-page panel showing a Time magazine cover with a portrait of the Dark Knight captioned, “Is He Back?” (DC, the comic book company that holds the rights to Batman, was previously a Warner property).
Remember when Prince decided he didn’t want to be called Prince anymore? Supposedly, that was due to dissatisfaction with management directives that were somehow trickling down from corporate. Before that, it had always been, “Hey, baby, we love your stuff. You need another six months to finish the album? Take twelve.” Under Time’s direction, it was more like, “We need you to finish yesterday. Today would be nice, but you’re already late. So if you could just go ahead and…” You get the idea: Bill Lumbergh Records.
Other artists that were upset with the change in the management style included Madonna, R.E.M. and Neil Young.
Anyway, with print media withering on the vine, the divestiture of its music and amusement park assets, and the remaining valuable assets of AOL likely being sold to Microsoft, the company’s remaining worthwhile assets include the movie studio, television, and its enormous coaxial cable infrastructure.