WarnerMedia (formerly Time Warner)

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WarnerMedia is the new name for what was previously Time Warner, adopted following completion of its acquisition in 2018 by AT&T. Time Warner surrendered its role as the world's biggest media group during 2009, spinning off two of what it had come to consider as non-core properties in order to refocus as a content business. The first to go was Time Warner Cable, demerged as an independent business that year although it continued to carry the company name until 2016. Far more significant in many ways was the year-end spin-off of AOL. That company joined the group in 2000 in a deal which came to symbolize the madness of the first dotcom era. Back then, friends and enemies alike promised that the combination of an internet company and a traditional entertainment creator would have a far-reaching effect on the way consumers accessed news, music and filmed entertainment. They were eventually proved correct of course, but not for another 15 or more years. That was too late for AOL and Time Warner. The combined giant failed spectacularly to live up to all the rhetoric, and in early 2003 AOL Time Warner recorded the biggest loss in US corporate history, almost $100bn, when it wrote off the value of its over-inflated assets, primarily America Online itself. AOL's contribution to the group continued to steadily decline, and Time Warner finally spun off the business in 2009 as a separate company. Magazine publisher Time Inc left the group in 2014. Instead, the slimmed-down former giant focused its attention solely on the the Turner and HBO cable networks and movie studio Warner Bros. By 2016, the time was finally right for a merger of content and internet-based delivery: Time Warner accepted an offer to be acquired for $85bn by AT&T. However the deal was opposed by the new Trump administration, for reasons that are not entirely clear, and became the subject of a bitter court battle. The judge found in the companies' favour and the deal went ahead as planned in June 2018.

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Adbrands Daily Update 16th Apr 2019: AT&T sold its near-10% stake in Hulu for $1.4bn, almost three times the $583m Time Warner originally paid for the shares three years ago. The acquiror was Hulu itself, which is expected to reallocate the shares to its two remaining shareholders Walt Disney, with around 60%, and Comcast with 30%. The sale values Hulu at $15bn, a good price, but still only a 10th of Netflix's $150bn valuation. AT&T sold the shares to avoid any conflict of interest when it launches its own OTT streaming service later this year.

Adbrands Daily Update 4th Mar 2019: AT&T was quick to announce a full overhaul of WarnerMedia's operating structure. As expected, HBO and most of the Turner cable division was merged under the banner of Warner Entertainment. This unit will also house the group's planned move into direct-to-consmer streaming. Robert Greenblatt, the recently departed chairman of NBC Entertainment, was named as divisional chairman. Turner's sports assets are being combined with CNN as Warner News & Sport under Jeff Zucker. Turner's animation strands Cartoon Network and Adult Swim, as well as the TCM cable channel, transfer to Warner Bros under Kevin Tsujihara. Turner's current international chief Gerhard Zeiler becomes chief revenue officer in charge of distribution and advertising.

Adbrands Daily Update 26th Feb 2019: A US court of appeal upheld last year's ruling in favour of the merger of AT&T and Time Warner. The three-judge panel said that the Justice Department's claims that the deal would encourage price rises for consumers were "unpersuasive" especially in light of AT&T's pledge not to block rival distributors from accessing content created by what is now WarnerMedia for at least seven years. AT&T will now proceed with closer integration of WarnerMedia into its existing structure - it had kept the two entities apart pending the latest appeal. The first move is expected to be a merger of WarnerMedia's HBO and Turner units, whose respective CEOs Richard Plepler and David Levy both announced their departure following the appeal decision.

Adbrands Weekly Update 15th Nov 2018: CNN filed a lawsuit against President Trump and several members of his administration after they suspended the press credentials of reporter Jim Acosta over an alleged "assault" on a White House intern who attempted to take back his microphone during a heated press conference. Press secretary Sarah Huckabee Sanders attempted to justify the decision by tweeting a version of the footage which had been doctored to make Acosta's interaction with the intern appear more aggressive than it was. CNN is accusing the White House of violating Acosta's rights under the First and Fifth Amendments, and demands the return of his credentials. In a notable development, Fox News was one of the many other news organisations that weighed in on CNN's behalf. Fox News president Jay Wallace said the company "supports CNN in its legal efforts to regain" Acosta's credentials. "While we don't condone the growing antagonistic tone of both the president and the press at recent media avails, we do support a free press, access and open exchanges". However, celebrated journalist Bob Woodward warned that the lawsuit may actually be playing into Trump's hands. "I think Trump would sit around and look at this and say, 'This is great'. Nixon effectively made the conduct of the media the issue, rather than his conduct. Trump has adopted that strategy, he's refined it. It's very effective, and so when we engage in it, we're taking his bait, in my view." [UPDATED] First round went to CNN: a US judge originally appointed by Trump restored Acosta's pass on a temporary basis while the case continued. The White House eventually backed down and restored full credentials to Acosta. As a result, the lawsuit was dropped.

Adbrands Weekly Update 18th Oct 2018: The week's biggest account assignment was won by Omnicom's Hearts & Science media agency, which will take over consolidated US media for AT&T's WarnerMedia (formerly Time Warner). The Turner and HBO cable businesses and Warner Bros Entertainment will all transfer. The main losers are independent Horizon Media and Dentsu Aegis-owned Merkle.

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Free for all users | see full profile for current activities: [See Warner Bros profile for the history of Time and Warner separately] The creation of AOL Time Warner was first made public in January 2000, when AOL announced it would acquire media giant Time Warner for what was then $190bn in stock. The deal created a business with a market value, also in 2000 prices, of over $350bn. (By early 2003, the group's value had plummeted to around one-sixth of that sum). Much coverage was given to the apparent implications of such a mammoth deal, combining the world's biggest online service with its biggest media company and America's leading cable operator. The deal, said commentators, would have a far-reaching effect on the way in which consumers accessed news, music and filmed entertainment. Equally undoubted was the fact that it would probably take longer than both sides would like to get these new delivery systems into play. However the scale of those problems only became apparent very much later.

In the meantime, the announcement of the deal raised a storm of protest from other internet service providers and media groups, who claimed the merger would create a virtual monopoly. Despite the best efforts of several companies, not least Disney, to derail the merger, the business was cleared to proceed in December 2000. AOL's founder Steve Case became chairman of the merged AOL Time Warner. Time Warner boss Gerry Levin became CEO, with Richard Parsons and Robert Pittman respectively taking the roles of COO for the Time Warner and AOL businesses. AOL Time Warner officially began trading in January 2001.

Almost immediately, problems began to emerge. The group had set itself an ambitious target of increasing combined revenues in its first year from $36bn to $40bn. However this was hampered by an economic downturn in the internet and media sectors. In the end the group's revenues fell short at $38bn. Meanwhile, it appears that the relationship between Case and Levin began to fray as the duo argued over the level of spending on convergence between online and offline media. At the same time, AOL's reputation was severely dented by a series of horrendous financial developments. First, in accordance with a deal struck at the height of the internet boom, the group was obliged to pay more than three times market value to buy back the shares in AOL Europe controlled by former partner Bertelsmann. AOL Time Warner's shareholders were even more dismayed by the $600m loss reported by AOL Europe for the year. Meanwhile internet advertising revenues were plummeting and subscriber growth was slowing at an alarming speed. Writing off value related to the online business caused AOL Time Warner to report a staggering $54bn loss for just the first quarter of 2002, then the biggest ever corporate deficit.

With problems at AOL growing, the group's share price plummeted. By July 2002, the stock was down almost 80% from where it stood when the merger was announced. Amid increasing resentment from former Time Warner managers at the apparent damage done to their businesses, Gerry Levin stepped down as CEO in favour of Richard Parsons, who announced a complete management reshuffle later that year. This led to Time Warner executives taking all the group's senior positions except that of chairman Steve Case. Despite negative comment from analysts, Parsons continued to argue that the merger could be made to work, and denied the benefits of a demerger. Later that year, however, the group was forced to declare that it had discovered accounting regularities at AOL. After further investigation it was revealed that AOL had overstated both its revenues and profits by $200m and $100m respectively in the period since late 2000. More problems emerged when the group was sued by one of America's largest pension funds. The lawsuit alleged that AOL employees had contributed to a $193m accounting fraud by online real estate company Homestore.com by participating in bogus advertising scams designed to inflate the dot.com's revenues. In a bid finally to draw a line under the financial bad news, Richard Parsons, pushed through a further mammoth charge for goodwill write-offs, and announced a through-the-line review of the America Online unit. In the meantime the SEC mounted a full investigation into the group's accounting policies. 

A series of huge write-offs of goodwill relating to acquisitions during the course of 2002 were capped by a final charge of $45bn. As a result AOL Time Warner reported a full-year loss of $99bn, an almost inconceivable sum in eroded value. Yet this staggering loss, largely an accounting adjustment, masked what had otherwise been a generally satisfactory year for the group's main media divisions.

With virtually all of the group's senior management positions now occupied by former Time Warner staffers, Steve Case was the last remaining AOL team member in a position of power. He avoided an initial call to oust him at a shareholders' meeting in September 2002, but finally succumbed to pressure in May 2003, although he remained a director of the group until November 2005. Ted Turner, formerly the group's vice chairman and its single largest shareholder, as well as an outspoken critic of the AOL business unit, also resigned in early 2003.

Following Steve Case's departure, AOL Time Warner called a truce in the long-running legal skirmish between AOL and Microsoft. This related to the so-called browser wars of the 1990s, in which the Netscape browser later acquired by AOL was steadily crushed by Microsoft's Internet Explorer. Just a year earlier, the group had reheated its complaint by seeking damages from Microsoft. In June 2003, the software company conceded a payment of $750m and the two sides agreed to abandon their differences and instead work together to broaden access to digital content online. In September 2003, seeking to deflect some of the negative media attention focused on the group as a result of AOL, the board approved a suggestion to drop the AOL tag from the group name, once again becoming Time Warner.

Soon afterwards the group agreed a deal to sell its Warner Music division to a consortium of investors headed by former Seagram boss Edgar Bronfman Jr. It finally closed the various SEC investigations into accounting procedures at AOL in December 2004 by agreeing to make a total settlement payment of $510m. In August 2005, it also settled shareholder lawsuits over the AOL-Time Warner merger, and the subsequent erosion of the group's share price, with a massive $2.4bn payout. This wasn't enough for corporate raider Carl Icahn, who has built a long and profitable career out of carving up unwieldy conglomerates. He subsequently launched a campaign to push the group towards a full break-up. Icahn launched an bitter attack via the media on Richard Parsons' management record and argued that Time Warner should be split into four separate businesses of Time Warner Cable, Time Warner Entertainment, Time and AOL. Former AOL boss, Steve Case, arguably the main architect of the merger which has inspired Time Warner's troubles, also emerged from the shadows to add his voice to the mix. He claimed to have proposed a break-up of the group in summer 2005, but the plan was turned down by the board. After several months of bitter opposition to Time Warner's management, Icahn abruptly dropped his suit in February 2006 when he found he was unable to raise enough support to depose the current board. See full profile for current activities

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