Zara Analysis

repared for:

Athens AOL Time Warner Management

Prepared by:

Courtney Tucker

Briana Jenkins

Hilary Gilway

Stefanie Walsh

Roberta Wainwright

Date: 3.7.2001

Team Four

Copeland Hall

Ohio University

Athens, Ohio 45701

March 7, 2001

Athens AOL Time Warner

28 Station Street

Athens, Ohio 45701

Dear Chairman of the Acting Board of Overseers of the Athens Time Warner Cable Company, Dr. James Perotti, Dr. Arthur Marinelli, Prof. Larry Rogers, Prof. Greg Waller:

After thorough research of your company, evaluating its assets and industries at national and local levels, we have assembled a comprehensive consulting report that identifies the benefits and drawbacks of your recent merger and how it will be realized in the City of Athens by 2003.

The report will address AOL Time Warner's current role in the entertainment and telecommunications industries by highlighting and evaluating the operating, financial and tax synergies on the national and local scope.

In consulting AOL Time Warner's role in Athens, we have researched the benefits, and future outcomes that could result from the merger, taking into consideration the anticipated problems and solutions. This report not only supports AOL Time Warner's prospects in the future, but also demonstrates the company's opportunity to grow and develop new technologies in comparison to its competition.

Through research and reflection, we have expanded our outlooks on the telecommunications and entertainment industries and gained consulting experience in the field of enhanced technology. We have appreciated this opportunity to work with you and look forward to seeing the AOL Time Warner merger succeed.

Sincerely,

Team 4

Hilary Gilway _________________ Roberta Wainwright ________________

Briana Jenkins _________________ Stefanie Walsh ________________

Courtney Tucker _________________

Table of Contents

Executive Summary iv

Introduction 1

Industry 1

Competition 2

Broad Scope of AOL Time Warner Merger 3

Operating Synergies 3

International Components 3

Management 3

Employees 4

Cross Promotion 4

Financing Synergies 5

Stock Price 6

Financial History 6

Pro Forma Financials 7

Tax Synergies 7

Local Scope in the City of Athens, Ohio 8

Operating Synergies 8

Cross Promotion 8

Demands of Increased Accounts 8

Cable Franchise Ordinance 9

Potential Customers 9

Financing Synergies 10

Conclusion