A calamitous merger and the men who engineered it
You can bet that Jerry Levin is not on Ted Turner’s instant-message buddy list.
In 2001 they were on swell terms. Turner was Time Warner’s largest shareholder and Levin was its CEO, presiding over the company’s merger with America Online. The marriage of the stodgy House of Luce and the Siren of the Internet produced an initial bonanza for Turner, whose stock soared on the first day of trading in AOL Time Warner stock.
But Wall Street’s enthusiasm for the deal was short-lived. Within 18 months, stockholders like Turner were crying foul. His paper loss in his AOL Time Warner stock totaled $8.5 billion.
That’s just one measure of the financial mess created by one of the most calamitous mergers in American corporate history. If the idiosyncratic Turner serves mostly as comic relief, Levin is the central figure in Nina Munk’s captivating post-mortem, ‘‘Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner.’’
Munk, a seasoned magazine writer, lays out the inside story of the AOL-Time Warner merger in a breezy, narrative style. Until Levin lost interest in the
The son of a butter-and-eggs dealer in Philadelphia, a lawyer who quotes Greek philosophers at the drop of a hat, and a full-bore workaholic (‘‘His weekends were devoted to reading the companies’ magazines cover to cover, watching advance release versions of Warner Bros. movies, and listening to Warners latest musical releases.’’), Levin joined Time Warner as a midlevel manager in 1980 and sharp-elbowed his way to the top.
By the late 1990s, he was fearful that Time Warner was missing out on the Internet ‘‘revolution,’’ which he heralded in language as inflated as the market valuation of online companies like AOL. Companies that ‘‘won’t empower their people to pursue the myriad opportunities of this transforming technology’’ are ‘‘doomed,’’ Levin declared. Nothing less.
Hooking up with AOL would inject the Internet spirit into Time Warner’s old-economy bones, Levin reasoned. And it would allow Time Warner to drape itself in the glamour of one of the hottest, Internet-branded companies.
For Steve Case, the visionary entrepreneur who had built AOL into the preeminent online portal, merging with Time Warner meant acquiring information and entertainment ‘‘content’’ and ‘‘real assets’’ to bolster his company’s stock price once the Internet bubble burst. Thus, in Munk’s words, ‘‘The Big Deal’’ was born.
How Munk can portray Case as a fool on a par with Levin, as she implies, is puzzling. Case may not have gained long-term employment as a result of the deal — he stepped down as Time Warner’s chairman last year — but he is still one of the nation’s wealthiest men.
If the merger was a debacle for Time Warner, it may have saved AOL from bankruptcy. In the fast-changing Internet environment, in which broadband access and pinpoint search engines like Google have made online portals less viable, the AOL division of Time Warner has been shedding subscribers at an alarming rate.
Ultimately, Munk faults Levin for arrogance. He was an ‘‘imperial CEO,’’ she writes, a manager who ‘‘discouraged free-ranging debate among his executives," who ‘‘cowed’’ board members and who sallied forth to do the AOL deal with an ear attuned mostly to his own egomania.
