10 Worst Internet Business Deals

 1. AOL Buys Time Warner For $162 Billion techdeals10

In 1990 Time Inc., which held over 90 publications including Sports Illustrated, People, Entertainment Weekly and Time, merged with Warner Communications. Warner owned companies including Warner Brothers, HBO and Hanna-Barbera. In 1996, Time Warner combined with Turner Broadcasting System, which includes TV networks including CNN, TNT, TBS and the Cartoon Network. Altogether they constituted a media behemoth, but as the Internet gained prominence they were having problems creating an online presence.

Meanwhile, America Online was booming on the Internet. It debuted in 1985, and 14 years later AOL was one of the top Internet providers in the world. In January 2000, the two agreed to join forces when AOL bought Time Warner for $162 billion.

Many people in the business world believed the combination was great; it was old media coming together with new media. Time Warner would have greater internet access, while AOL would get access to additional content and television networks. The merger valued the new AOL Time Warner at $350 billion, making it the greatest corporate transaction in American history.

It also bears the record for the worst merger of all time. There were challenges from the very start, and AOL failed to move with the times. They were still a dial-up Internet service while the industry was transitioning towards broadband. By 2009, 10 years after the merger, AOL and Time Warner parted. At that moment AOL was only worth $2.5 billion, which was around 10% of their wealth at the time of the merger, whereas Time-Warner was worth about $36 billion.

2. Worldcom Buys MCI Communications for $37 Billion techdeals9

Worldcom was formed in 1983 as a long distance phone provider. In 1997, Worldcom purchased MCI Communications, which was one of the first long distance businesses in the United States to compete against AT&T. Worldcom valued MCI for $37 billion, and the newly united MCI Worldcom was the second biggest long distance carrier and one of the leading participants in the developing field of delivering Internet access.

At the time of the merger, Worldcom was competing against two other proposals to purchase MCI and certainly overpaid. However, it wasn’t the largest the issue with the arrangement. The primary issue was Bernard Ebbers, who was chief executive officer of Worldcom – he committed fraud that was estimated at roughly $11 billion. In July 2002 the corporation filed for bankruptcy, one of the biggest cases of its sort in American history. Ebbers was captured and handed 25 years in jail.

MCI was able to crawl out of the ashes, but a lot of damage had been done. They were purchased for $8.44 billion by Verizon in 2004, and although it’s a lot it’s significantly less than the proposals that competed with Worldcom in 1997.

3. Terra Networks Buys Lycos for $12.5 Billion techdeals8

Four years after starting in 1996 Lycos was the third most visited website in the United States, drawing 33 million unique visitors a month. During their climb, the Internet search gateway purchased a number of other websites, including Tripod, Angelfire and Hotbot. In May 2000, Spanish telecommunications operator Terra Networks purchased the site for $12.5 billion in shares.

By 2004, Terra Networks was ready to sell Lycos and Daum Communications Corp., which is located out of South Korea, bought it for $95 million. That turned out to be a disastrous investment for them as well, since in 2010 they sold Lycos to the Indian company Ybrant Digital for $36 million.

4. Excite Buys @Home for $6.7 Billion

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Before the birth of Google there were a lot of search engines battling for users, and one of the front-runners was Excite. Wanting to grow their company they purchased @Home, a high speed Internet service, for $6.7 billion in 1999. It was a poor move from the very start. In 2000 the corporation lost $7.4 billion. They were forced to file for bankruptcy in October 2001. By February 2002 the firm was gone and @Home’s network access was sold to A&T for $307 million. Excite was acquired by Ask Jeeves for just $10 million.