There is a growing body of thought that argues the so-called AOL Time Warner "merger of equals" might not have gone so far astray had it not been for Chairman Stephen Case's ill-timed decisions to buy back the 49% stake in AOL Europe owned by German publishing giant Bertelsmann AG and acquire European magazine publisher IPC Media. Admittedly, the U.S. media giant would neither be saddled with $29 billion of debt today nor facing threats of below-investment-grade status from credit rating agencies. The New York-based company also would not have to be considering the sale of some of its most profitable properties at a time of severely depressed asset prices. "It would have made a huge difference if the merged company had not made that AOL Europe purchase right after completion of the merger," says Sean Egan, a managing director at Philadelphia-based ratings firm Egan-Jones Ratings Co. "What they were doing in a sense was doubling their bet on the Internet economy, right before the Internet economy tanked."

Maybe so, but even if the company moved from foundering to merely floundering, most business experts still would put it among the classic cases of business combinations that were critically flawed from the start. Not necessarily because AOL was new economy and Time Warner is on the cusp of the new and the old. And not only because one company–AOL–was all about expanding revenues and market share, and Time Warner was structured around maximizing profits. Many experts now feel that the AOL-Time Warner merger imploded as much because almost no consideration was given, at least until it was too late, to the question of how to integrate the operations and personnel of the two businesses–not during the pre-merger planning, when only a handful of the most senior executives were drawing up what one mid-level Time Warner executive cynically refers to as the "pre-nup," nor even after the deal was completed.

As a result, some of the smartest executives, such as ex-Time Warner CFO Richard Bressler, were shoved out, while Time Warner managers who remained were marginalized. (Bressler ended up becoming CFO at Time Warner's prime competitor, Viacom Inc.) "It was hubris," says Kathryn Harrigan, a professor of business leadership at Columbia Business School, who has taught several former and current Time Warner employees. "AOL acquired Time Warner at the pinnacle of its stock price, and they felt they could do no wrong. No one at AOL wanted to listen to anyone from Time Warner."