My reverse-capitulation theory. AOL's savantlike brilliance has always been to understand how it can survive to a new day. Understanding that it will die without access to cable pipes, it negotiates a deal with Time Warner that has two profound concessions. It gives TW a huge premium over its current value and turns effective control of the company over to Time Warner's CEO. Press accounts keep saying that Levin as CEO will report to Case as chairman, but that's confusing politesse with procedure. CEOs report to the board, which will be divided 50-50 between AOL interests and TW ones. Press accounts also keep talking about AOL's strong management. In fact, AOL, famously, has almost no management -- it has managed just by continuing to grow (indeed, you don't really need management when you have such growth). The reality of TW's contribution of 80 percent of the revenues of this new company, along with its vastly greater operations, means that, almost inevitably, in counter-counterintuitive logic, the dog continues to wag the tail. Which is to say that old media has bought new media (since I recently predicted that CBS-Viacom would buy AOL, I like this interpretation).
My Pittman theory. Or old media has bought old media. However lucrative, AOL has been Bob Pittman's exile. In that regard, this deal may not be so much about establishing a new world order as about getting Bob Pittman back to midtown. He's a New York glam-media guy. A television guy. Internet, shminternet. Indeed, in the not-too-distant future, after AOL becomes Time Warner-ized, people may say "new media" and that will be a funny line, like "New Left."
Synergy kills. Time Warner could still screw up AOL. TW believes its big success in synergy (after its big failure with Time and Warner, the old-media-new-media combination of its time) was bringing CNN into the fold. In this process, Ted Turner has been reduced to a kind of TW mascot or comic figure and CNN, once something quite interesting, has become as bland as anything else on television. Now, it is, at first blush, hard to imagine AOL's getting blander. But that mistakes the front-room AOL for the back room. In the back room, what you have is the greatest distribution channel for pornography since . . . there is no since. It is sui generis and is AOL's not-so-secret of success. What happens when Bill Bennett shows up at the first AOL-TW shareholders' meeting?
Everything's in play. The deal, Levin noted, is not expected to close until the end of the year. A year? It seems almost unnecessary to even consider all the things that might happen or go wrong in a year, and that's a real-time, not Internet-time, year. But for starters, there's the uncertain future of AOL and Time Warner shares (this is, after all, a deal based on Internet money rather than cash money), the uncertain future of the market itself, and the changing ambitions of other players. These players include not just Microsoft (which may well be broken up, creating more companies that might be interested in AOL or Time Warner), AT&T, and GE, companies that could afford to tamper with the deal, but twenty other companies who undoubtedly know a few intrepid financiers. A little perspective: TCI's missed merger with Bell Atlantic was, once, a seismic event, too. So while we can safely assume that the AOL-TW announcement has set in motion a vast chain of unintended effects, and that hundreds of dopey deals will now be entered into because of it, we can by no means be sure any of those deals will merge AOL with Time Warner.
A word to the wise. DSL is better than cable.
Now everyone, including me, is staggering around like there's been a world-class coup or assassination or something. This shock may be a tad self-centered (we are all in the media business, after all), or it may be that we are starting to get an inkling that the thing going on here is, in addition to economic jockeying for position, a struggle for the soul of something.
A few days before the announcement, I was flipping channels and paused for a moment on a CNN show that had on its panel Gerry Levin, Walter Isaacson, Kurt Andersen (also a former Timer), and mogul-fanzine writer Ken Auletta, talking about the future of the media. Suddenly, in the discussion, Levin, who probably knew he was soon to announce the largest merger in history, started to talk about governments' fading and some new sort of corporate city-states' rising and how the world would be mediated in some vaguely sci-fi-ish New Agey Rollerball digital way. Everybody else on the panel (Walter says he didn't know about the AOL deal until his wife heard about it on CBS) seemed startled, and then treated Levin's remarks as the most egghead-ish of hypothetical futurist stuff.
Meanwhile, I have another message on my machine from Bruce Judson suggesting, friend to friend, that I might want to consider what I say about the world's largest media-technology-communications organization -- just a little restraint, he suggests, advice I find myself thinking about for just a little longer than usual.