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That's All, Folks!

Is Gerald Levin making for the exit at just the right moment?

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What does it mean when a corporate visionary like AOL Time Warner CEO Gerald Levin -- a guy with a reputation for seeing over the hill -- looks into the future and decides he doesn't want to be a part of it? In the surprise retirement party he threw for himself last week, Levin indicated over and over that recent events made running a company seem, well, beside the point. But what if other, more mundane forces were at work?

Levin's unexpected exit could mean that he knows that the next couple of years will not be nearly as bright or bold as he once predicted. "This is typical Levin," says an editor at one of the company's magazines. "He made this move when he had enough time left on his contract to control succession." Retiring in May, a year and a half ahead of schedule, also gives him credit for the biggest media merger ever, while -- just for instance -- allowing him to forgo significant blame if all of those parts don't play well together.

Last January, Levin called the merged behemoth "a big monetization machine," but almost a year later it looks a lot more like an ad-driven company in the deepest media recession in years. Revenue growth has been half of what the company promised and the stock is down 23 percent. (The overall Dow is down 4 percent.)

"A lot of us who know Jerry are wondering what he knows that we don't," says a senior executive in the publishing division. In other words, when it comes to Jerry, the timing might also be a little scary.

Close observers at the company pooh-pooh the idea that Levin is getting out while the getting's good, suggesting that he'd hardly name Time Warner guy (and personal friend) Richard Parsons CEO if there were a booby trap waiting. "I don't think it is anything but a personal decision," says Jessica Reif Cohen of Merrill Lynch, who has followed the company and Levin for some time.

Parsons's ascension over AOL's Robert Pittman, his co-COO, has been cast as the triumph of old media over new, of New York over Virginia. But it makes sense for the times: Parsons has become king because content is. In the vapor trail of September 11, concerns like gross revenues seem, well, gross. Levin has spent a lot of time recently talking about the company's "sacred trust" as national storyteller.

It may be doing a good job of covering the biggest story in years, but AOL Time Warner still faces significant problems with its online service, which Levin called the "crown jewel" of the merger.

The plan to make AOL Time Warner a roach motel for consumers, a sticky village that would be easy to get into and hard to get out of, seems to be proceeding, but no one is spending money to reach those consumers.

"It is a great marketing machine, but advertising and commerce revenues are falling down dramatically and subscriber growth is difficult because it's working off a bigger base," says Cohen. The cost of acquiring those subscribers -- freebies, promotions -- is going up. Even though AOL actually raised prices back in July by two bucks, it's making less money per subscriber. And it's running out of seducible Luddites -- most people know what the Internet is and have already decided either to use it or to ignore it.

But that's not Levin's problem anymore. There's more to life, he told the Wall Street Journal, than being a master of the universe: "I'm my own person. I have strong moral convictions. I'm not just a suit. I want poetry back in my life."

Some of the poetry is rendered in dark hues. Levin arranged to have an out clause in his contract after his son Jonathan -- a high-school teacher -- was murdered by a former student in 1997, an event that left him fundamentally changed. Levin said that September 11 reminded him again that life is short.

"He is leaving on his own terms and his own time," says Scott Cleland, CEO of the Precursor Group. "Not many people get to choose their exit."


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