[opendtv] News: Case accepts blame for AOL-Time Warner debacle
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 14 Jan 2005 10:19:03 -0500
An interesting retrospect from Steve Case about=20
the AOL Time Warner debacle. I do not agree with=20
all of his assessments, but the story does come=20
close to the mark in with this paragraph:
Indeed, for Case and Gerald Levin, then-CEO of=20
Time Warner, the architects of the deal, grand=20
visions of an Internet-charged media behemoth=20
faded into the bland realities of turf wars and=20
cutthroat politics. Case learned Time Warner's=20
notorious culture of fiefdoms the hard way, as=20
multibillion-dollar businesses bristled at the=20
idea of working with their new AOL masters.
Clearly, Case must have believed that he could=20
leverage Time Warners cable assets to build the=20
infrastructure for a more Internet centric=20
approach to the delivery of entertainment and=20
broadband data services. I suspect that Levin=20
encouraged him, knowing full well that the TW=20
"fiefdoms" would do everything in their power to=20
prevent Case from succeeding.
I guess you could call this the "embrace and=20
devour" strategy. Case was flying high, but he=20
became a target, as Time Warner and the rest of=20
the big media conglomerates helped to burst the=20
high tech bubble, and slow the inevitable=20
transition to a world where the tight coupling of=20
content and carriage can easily be circumvented.
Regards
Craig
Case accepts blame for AOL-Time Warner debacle
January 14, 2005 12:00am
Source: CNET Networks, Inc. All rights reserved
2005-01-12, CNET Networks via NewsEdge=20
Corporation : MOUNTAIN VIEW, Calif.--Steve Case=20
is not ashamed of taking the fall for the merger=20
of America Online and Time Warner, perhaps one of=20
the greatest failed deals in corporate history.
Two days after the fifth anniversary of the deal,=20
a visibly graying Case, former chairman of what=20
was then AOL Time Warner, provided a candid=20
perspective into the factors that prompted the=20
merger and some of the general reasons it failed.=20
The blame could go to the billions of dollars in=20
market value evaporating during the bust, or=20
management's stubbornness in promising more than=20
it could deliver, or doing all the wrong things=20
at the wrong time.
"The merger was my idea. If you wanted to be mad=20
at somebody, I was the one to be mad at."
--Steve Caseformer chairman,AOL Time Warner
=46rom Case's view, the blame starts with him.
"In retrospect, I probably wasn't the right guy=20
to be the chairman of a company with 90,000=20
employees," Case said during an event at the=20
Computer History Museum here. "In retrospect,=20
none of us were the right guys."
Indeed, for Case and Gerald Levin, then-CEO of=20
Time Warner, the architects of the deal, grand=20
visions of an Internet-charged media behemoth=20
faded into the bland realities of turf wars and=20
cutthroat politics. Case learned Time Warner's=20
notorious culture of fiefdoms the hard way, as=20
multibillion-dollar businesses bristled at the=20
idea of working with their new AOL masters.
Case added that much of the merger's failed=20
vision stemmed from a failure in "timing and=20
execution." When the stock market began to=20
collapse in 2000, the ripple effect did not reach=20
AOL Time Warner (the company has since dropped=20
the "AOL") until late 2001. After an embarrassing=20
retraction of its financial forecast and a=20
toppling stock price, Levin was shown the door,=20
Chief Operating Officer Bob Pittman was ousted,=20
and Case resigned as chairman in January 2003.
"For some reason--some was cultural, some was the=20
stock going down--people got mad," he said. "The=20
merger was my idea. If you wanted to be mad at=20
somebody, I was the one to be mad at."
Still, Case's reasoning for the deal made sense:=20
AOL needed Time Warner for its cable division.
While AOL was the undisputed champion of dial-up=20
Internet access when the deal was inked in 2000,=20
the greater threat posed by broadband loomed in=20
the distance. Cable companies and local phone=20
giants were the main purveyors of high-speed=20
Internet access, leaving outside players such as=20
AOL unable to upgrade their customers while=20
keeping their access business profitable.
Now in 2005, AOL has watched its dial-up=20
subscriber base plummet by nearly 4 million since=20
2002. Most of these customers left for broadband=20
services provided by their cable or phone=20
company, and Time Warner Cable decided to stick=20
with its own Road Runner ISP rather than market=20
AOL.
Time Warner "provided an unparalleled array of=20
assets for AOL to transition to broadband," he=20
said.
Out of the spotlight for two years and counting,=20
Case has set his sights on other pastures. While=20
still a member of Time Warner's board of=20
directors, Case said he's turning his back on=20
tech and the Internet for now, and focusing on=20
new ventures. He's interested in health care,=20
especially preventative medicine and wellness,=20
and is dabbling in real estate. He's working on=20
philanthropic issues and spending a lot of time=20
in Hawaii, where he grew up.
Case wants to continue investing his time and=20
money in "disruptive" businesses, but he remained=20
mum on his plans.
"I don't particularly miss it," he said about the=20
technology business. "I feel like I've been=20
there, done that, and I'm interested in new=20
things." .end (paragraph)<<CNET Networks --=20
01/12/05>>
<< Copyright =A92005 CNET Networks, Inc. All rights reserved >>
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