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Valued at $166 billion when the self-styled "deal of the century" between America Online Inc. and Time Warner was announced on Jan. 10, 2000, an AOL-containing Time Warner today commands a market capitalization of $28 billion. This 83% loss in market value is, sadly, what's easiest to grasp about the deal that should never have been. Harder to grasp is the toll on the combined company's executive ranks. Jerry Levin, Bob Pittman, Ted Turner, even Steve Case -- all great leaders and all gone. And they're off the corporate stage not just prematurely but most likely permanently for having done little more than drink from the same vat of Kool-Aid that had so many of their peers, not to mention analysts, bankers, entrepreneurs and investors, spouting about a new economy. The new economy was never realized, and neither was AOL's potential as the driver and distributor of Time Warner's unmatched inventory of content. Not that AOL Time Warner, which dropped the scarlet letters A-O-L from its corporate name in 2003, didn't keep trying. The efforts have already added two successive AOL heads -- Jon Miller and Randy Falco -- to the list of those the original deal beheaded. It didn't help that, as an Internet service provider, AOL has never been more than dial-up. That meant the transaction in which it figured so prominently (its shareholders received 55% of the combined entity's equity) had built-in obsolescence. It also meant, arguably, that the promise misplaced in AOL kept its parent company from pursuing the potential of its much faster and technologically advanced cable-driven ISP, Time Warner Road Runner. Sumner Redstone, while CEO of a presplit Viacom Inc. (NYSE:VIA.B), has on occasion talked about being approached by Case before the AOL chairman and CEO got in too deep into dealmaking discussions with Time Warner chairman and CEO Levin. "I didn't trust their currency," Redstone later crowed to the press. "I didn't see any advantage of marrying our great businesses and brands to any Internet company." It's almost unthinkable that Redstone, who turned 86 on Wednesday, continues to serve not just Viacom but CBS Corp. (NYSE:CBS) as executive chairman, whereas the list of AOL victims merely continues to lengthen. One can't even be certain it will stop before current AOL chairman and CEO Tim Armstrong, the Google Inc. (NASDAQ:GOOG) recruit in whom Time Warner has as much faith today as it did with any of his predecessors. - Richard Morgan
CategoriesComments
From: xAOL'er,
Agree with juno these guys were nothing but greedy idiots. They would hold company forums in which employees would ask them about our (nonexistent) broadband strategy, to which the typical reply would be something like 'look at your stock options. Happy now?"
Posted on:
May 29, 2009 3:23 PM
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Time Warner Inc. (NYSE:TWX) may be able to spin off AOL LLC, but it will never spin away the unit's role as a destroyer of executive careers and shareholder value.
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You have got to be kidding!..Steve Case et el were greedy, short sighted morons!...It should be abundantly clear that the American business executive knows very little of business and alot about self indulgence!...
These guys were burned down early thankfully and Wall Street only has to screw up 6 or 8 more times before they are burned down.
Value..ha! Self enrichment at the expense of employees, the economy .. these people are the biggest threat to America!