Bruce Judson left a long message on my machine. He was making a joke about some meeting we had been at together a few years ago. Judson and I – with Time’s current managing editor, Walter Isaacson, and (now former) Time Inc. executive vice-president Curt Viebranz – had sat on a committee at Time Warner that had decided to recommend that the company not buy AOL in 1994 but instead start Pathfinder (Walter has always said that if Time Warner had bought AOL, it would have screwed it up), obviously a corporate crossroads that future media scholars will write their dissertations about. But why was Judson talking about this now? – somewhat hysterically, too – I wondered as I got into the shower. It was only in very slow motion that Judson’s message started to seem coherent in a more or less breathtaking way. I jumped out and, dripping, got onto MSNBC.com (not, I realize, CNN.com).
I thought: (a) This can’t be; (b) it makes no sense; (c) the world has gone mad; (d) the world has forever changed. I thought: Maybe we’ll all remember where we were when we first heard about The Deal.
I was not at all sure what to do.
As I might run out to look at a fire, or a street protest, I threw on some clothes and caught a cab over to the news conference at the Equitable Center on 52nd Street. I was hoping Walter would be there, but I didn’t see him. Among other small-time things I wanted to ask him was how exactly does a news organization go about covering such an earth-shatteringly mammoth event of its own making?
But was that too earnest?
What was the proper affect here? Were we supposed to regard this as just a business story? Market reach, share price, boardroom stuff, instead of alignments, power shifts, and virtual geopolitical moves? The auditorium was filling up with business, media, and Internet reporters, which for a second seemed surprising – why were they here? Where were the reporters from the national desk? The foreign desk, even? (Is this just my bias, not thinking of business reporters as real reporters? And technology reporters as an even lower order?) We’re going to miss the meaning of this story, I started to think, because the right desk doesn’t exist. Perhaps there should be a corporate-state desk. A convergence desk. In that light, the AOL-Time Warner merger might be up there at some Munich Pact-Suez Canal-League of Nations level, or an entirely new kind of corporate-historical concept.
“After AOL becomes Time Warner-ized, people may say ‘new media’ and that will be a funny line, like ‘New Left.’ “
Something else: Reporters at other kinds of events – political events, disasters, crime scenes – are always nosing about, kibitzing, asking each other what they’ve got, but at this event, everyone just sat down and waited to be told what was what.
Granted, for a black-helicopter moment, a power move so large, so amazingly tectonic, that history would be written from here, its initial public face, this joint press conference, was pretty bland.
The long lenses and porta-video packs were down in front of the auditorium when Gerry Levin, looking professorial and rumpled in much-commented-upon chinos and open shirt, came onto the stage, followed by Steve Case, in J.C. Penney-ish gray suit, then Ted Turner (imagine Steve Case and Ted Turner having a conversation), then the new co-COOs (even typographically, that is awkward) Bob Pittman and Dick Parsons, and then Mike Kelly, AOL’s CFO. Everybody but Case sat down on the Dating Game-like chairs. Case opened, forcefully. But did this mean that he was the big cheese or just that he was introducing Levin? Levin indeed turned out to be the real presenter. He gave the details, such as they were, of the deal, and the philosophy, such as it was, and sent the clearest signals, to the extent that any were clear, about what was actually happening here.
It was not a businesslike presentation at all – none of the overload of information that is customary at merger announcements, the charts and bullet-pointed handouts – but, befitting a moment of at least as much political as commercial significance, a wholly symbolic tableau, although all the symbols were carefully veiled.
To do justice to the many conflicting and various unuttered messages that were being sent here, you’d rightly have to look at this the way we used to look at the lineups and hierarchies and seating positions on May Day in Red Square. But the press, much of which is now (as long as I am in this metaphor) something like the Soviet press (hmmm … would this mean that my friend Walter Isaacson is now some high-ranking muckety-muck in the new-media ministry of information?), took the most literal of views.
Win-win was the most frequent analysis. I wonder if we were this brain-dead just because we were so caught off guard, or because we or our colleagues had, instantly, made so much money off the deal (nearly 2,000 Time employees had made $1 million or more, estimated the New York Post – in that respect, it was win-win) and it was hard to think through the euphoria or jealousy, or because, as business reporters, the whole point is just to analyze with respect to up-and-down and not with an eye toward character, or consequence, or forest-from-the-trees.
It is hard to move from the sheltered short-term share-price world (no one gets killed or starves) to the real world.
Herewith, then, is an attempt to see this as a profound struggle for … for what, I am not yet sure:
My coup d’état theory. Levin’s dress and demeanor were less those of a man trying to get with the new-media program than a message of resistance. He looked not like a new-media type but like a political prisoner. Salvador Allende. We know that AOL had been in a difficult negotiation with AT&T for access to its cable pipes. Let us assume that negotiation had all but failed. Let us assume, too, that AOL regards access to such pipes as absolutely necessary for its medium-term survival. Surveying its alternatives, it sees only one: Time Warner’s cable network. While the party line is that talks about the merger began in October, it is almost impossible to believe anything might have remained so unleaked and unrumored at Time Warner (technology companies keep secrets; part of the charm of Time Warner is that everybody talks). The very lack of leaks might indicate that this was a shotgun proposition. In other words, days before the announcement, Case and company issue the following ultimatum to Levin (possibly in a more cordial style): We will offer $110 a share for 100 percent of your stock. Come quietly or else.
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.