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America Online (AOL) and Time Warner announced their merger on 10 January 2000 to create the world''s first fully integrated media and communications company with a market capitalisation of US$350 billion. While AOL would have access to the high-speed broadband cable network of Time Warner, Time Warner expected itself to be catapulted into the ''Internet big league'' by virtue of the merger. The merger faced stiff resistance, largely from the consumer groups and its competitors, who wanted the combined firm to open up its cable networks and allow rival entertainment companies to stand on an equal footing. Even as the merger was finally allowed to proceed by the Federal Trade Commission on 11 January 2001, the market capitalisation was already sliding downwards with falling share prices due to investor confusion over the fate of the merger and the Internet bubble burst that saw Internet stocks plummeting. The case helps stimulate a discussion on the reasons and events that led to the failure of the merger and alternate strategies that could be adopted. A structured assignment ''304-250-4'' is available to accompany this case.