Media companies, which went on an expanding spree -- buying companies and making merger deals, are facing rough weather. The promised synergies have been elusive, hard and slow to come by.

AOL Time Warner, Vivendi Universal, Disney, Granadaall big names in the global media arena. The mergers and acquisitions that these companies involved themselves with created headlines and of course expectations. But where do they stand today? These media monoliths and many others actually seem to be caught in a bind as they are plagued by huge debts, falling advertising revenues, frequent shuffling/ousting of CEOs and even accounting jugglery. Given this background, the vigil of the Wall Street on the media sector has intensified. Investors are facing anxious moments as the so-called TMT (technology, media and telecom) stocks are reflecting the not so happy times. Besides, the recession and corporate scandals have adversely impacted the markets. But media was one sector that was the darling of the stock market and expectations of high returns were common.

Convergence and synergies was one mantra that spun off many a merger in the industry. The perception was that anything could converge with anything. Many companies paid too much attention to acquisitions, which they did not know how to use, or far still could not even use. The benefits of so-called convergence have not materialized. In fact, convergence is not as viable or possible now. Take old media and Internet for instance; the failure of America Online Inc. (AOL) and entertainment and media giant Time Warner is there for everyone to see. Benjamin Compaine, Associate Director and Research Consultant Program on Internet & Telecoms Convergence, Massachusetts Institute of Technology says, "AOL Time Warner is the most obvious example of the `What were they (and the so-called analysts who praised it) smoking?' Was it to get AOL onto Time Warner Cable's broadband service? Couldn't the parties have negotiated an alliance for that with far less cost and commitment?" He points out "even Time Warner has never proven any substantial synergies from the Time and Warner merger: they remain run largely as separate fiefdoms. Time Warner's profit margins are not greater than Time or Warner had been over the years prior to the merger, indicating lack of synergies even for the old media companies. They could be profitable, but not necessarily more than if they had stayed separate."

In the case of AOL and Time Warner merger, the estimates of synergies were largely inflated. The clash of cultures of the two entities complicated matters. Indeed Time Warner veterans are angry with AOL employees for spoiling the show. AOL Time Warner's film and television studios and networks are performing well. It is the Internet division, the new media, that is doing badly and dragging down the entire group. AOL's revenues have fallen because of decline in Internet advertising, its main source of revenues. Most of the online companies that were advertising on AOL have closed shop. Recently the projection for advertising and commerce revenues was revised to $1.7 bn from the initial figure of $1.8 bn to 2.2 bn.