From AOL to W

AOL and George Bush have lots in common. Regarding the tasks in front of them, they are both inexperienced and they are both, relatively speaking, usurpers. It’s a fluke that they are in charge. What’s more, with its headquarters deep inside CIA country, AOL has always made the most of its Reagan-Bush connections. Colin Powell, until days ago, was on the AOL board (with $8 million in options); before him, there was Alexander Haig.

In New York and Hollywood, which are not just liberal towns but Time Warner company towns, a lot of people are thinking about AOL the way they are thinking about the new Bush administration. That it’s unbelievable, even ridiculous, that AOL gets to run so complex and vast an enterprise. That these AOLers, after you stop being impressed by the new-media thing (and only the people at Time Warner are still impressed by new media), are golf-playing, humorless bumpkins (even Bob Pittman, who claims his street cred from MTV, has spent most of his career in the real-estate and theme-park businesses), or out-of-town, shoe-shine-and-a-smile hucksters. Then, too, along with the general fear of lost influence and, possibly, lost jobs (which almost everyone at CNN is worried about) and lost perquisites, there is the belief at Time Warner that AOL values are deeply inimical to TW values.

But Time Warner, certainly the greatest Democratic company in the country (note: the Time Inc. of Henry Luce and Whittaker Chambers was once a great Republican company), may be, in this metaphor, not so much a version of the Democratic Party but rather a version of Washington itself. While certainly liberal in its orientation, its principal interest is in the accumulation and operation of power. So if the first impulse at TW is fear, or at least suspicion, of AOL, the larger sense is of a new game and a general interest in learning how to play it. There is a sense at Time Warner not so much that it has truly been taken over, but rather that the situation is merely in a high and tantalizing degree of flux. That the Republicans are in the White House, or that a new sign is up on 75 Rock, only means that there is an added factor in a more complex power equation.

Let the games begin, in other words.

Here then, at the inaugural moment of the AOL regime, is a set of handicapper’s measures and benchmarks with which to gauge the progress and assess the weaknesses, strengths, and challenges of the new administration. Of course – and keep this in mind – my view, since most of my friends and colleagues work at Time Warner, is based on rumors, suppositions, articles of faith, character analysis, and historical memory from the TW side.

Indeed, this may be the biggest difference in the two cultures. The AOL side, which remains mostly locked down in correctly named Dulles, is tight-lipped or uninformed or even unaware (it is, principally, a technology company – nondisclosure agreements are the norm – rather than a self-analyzing and self-publicizing media company). Whereas those on the TW side (although you should not infer that I regard the TW side as a monolith in any way – it is Yugoslavia to AOL’s Albania) are big blabbermouths.

One of the main themes of the merger is that it’s a way to deal with an organization hopelessly divided, like Washington, by fiefdoms and personal ambition.

Of the 85,000 people who work for the new AOL Time Warner, most are from the former Time Warner, and they tend to talk about their company and situation and prospects as most of us talk about the nation. That is, they tend to think of themselves less as part of a corporation than as part of a commonweal. This sprawling, haphazard, anarchic nature of the company is, if not like America, then surely like New York (since Time Inc.’s merger with Warner ten years ago, one of the interesting transitions is that it has become a Jewish company, another thing that AOL is most certainly not). Unlike at AOL, which tends to feel it’s us versus them (whoever “them” is at any given moment – Microsoft, Netscape, the cable companies), people at Time Warner generally feel that everyone works for Time Warner, or has, or will: What happens to us, happens to us all. TW is the once and future media nation.

The legitimacy issue. at TW, there’s a definite sheepishness. Most everyone acknowledges that were the deal done now, it would be flipped around – TWAOL – or, even, not done at all; AOL would be held in the same low regard as all other Internet companies. But by the time this became clear, there wasn’t any way to undo the deal without grievous cost and mortal embarrassment. So in the face of everyone’s knowing it should not have been done, everyone had to insist that it was for the best anyway. Reality trumped reality. As George Bush said in response to Bill Clinton’s recent taunts: “He can say what he wants to say, but I’ll be sworn in as president.”

And yet, as much as everyone tries to insist that what’s done is done, it never is. The fact that you know that people are doubting you, or, worse, making fun of you, makes you all the more determined to prove yourself. As Dubya will try to Republicanize a Democratic nation, so AOL will try to new-media-ize an old-media company (or distribution-ize a content enterprise, or Dulles-ize Sixth Avenue). Already, Jerry Levin has uttered the word disintermediation more times than any human being should be permitted to.

Approval numbers. If the market (whomever and whatever you take that to be) says it’s good, then it is good. Good poll numbers will make Bush legitimate; likewise, the perception of AOL Time Warner as the world’s most dynamic media company, rather than already some humorous bit of nineties nostalgia, depends upon its share price. AOL-TW is in the high forties now. If it’s not at least fifteen points higher in a year (this is the measure I got from a senior Time Warner fellow who seemed pleased by either prospect – money or chaos), then mid-term elections will sweep the AOLers back out of power. An article of faith is that the new company will not have the relative luxury of the several years of doldrums and malaise that Jerry Levin survived after the Time and Warner mergers – that AOL-TW has to look like it’s becoming whatever it’s supposed to be almost immediately (content company? Pipes company? Telecommunications company? Direct-marketing company?).

Who’s in charge? Dubya-the-delegator may not truly be in charge, and neither may the people at the top of the AOL-TW org. chart.

Most everyone would agree that Bob Pittman, three rungs down from the top, is in charge. There have been a series of top-down B-school-type management meetings over the past few months at TW where, very clearly, everyone has been told that Bob Pittman is in charge (with much bristling at TW about the arrogance of the AOLers). Rumors were going around a few weeks ago that Pittman’s counterpart and theoretical equal on the TW side, Richard Parsons, was going to join the Bush administration (and additional rumors had it that this offer from the Bush people was being engineered by Bush friends at AOL).

Of course, being in charge when you are not necessarily in charge is a funny way to be in charge. But it is the AOL way. Steve Case has always let other people run the company he is supposed to be running. He has been called Reaganesque before, but that may be because we didn’t yet have Dubya to compare him to. A frequent question around Time Warner goes: “What does Steve Case do?” And no one knows, except that, oddly, this seems to confer on him more rather than less power.

But wait – what about Jerry Levin?

He has already engineered what might appear to be a highly advantageous setup. Levin, the CEO, with recession looming, ad markets cratering, dot-coms crashing, has passed on the first, and no doubt most difficult, test of AOL Time Warner to Pittman and his cronies.

Likewise, there are many Democrats who are not at all unhappy that George Bush has a remarkable opportunity to hang himself and, with him, the Republican Party. Everyone at TW who has seen Jerry Levin survive Nick Nicholas, Steve Ross, and Ted Turner would hesitate to say that he will not survive a few others.

Partisanship and divisiveness. One of the main themes of the merger is that it’s a way to deal with an organization hopelessly divided, like Washington, by fiefdoms and personal ambition. Everywhere you go within TW, territories and self-interest are clearly marked.

You have the magazines. HBO. The movie studio. The music companies. The cable guys. CNN. And each of these parts of the company is riven by all manner of wars, standoffs, and unstable alliances. These are feudal states divided by strategies, personalities, and long traditions, on top of white-knuckle power plays. Jerry Levin has never been able to run this company (nor, some would say, has he ever tried) as Murdoch runs News Corp., or Eisner Disney, or Redstone Viacom. It’s not top-down; it’s about competing power structures.

AOL, like George Bush, is promising to change the gridlock culture. Giving Bob Pittman control over a sweeping part of the company is meant to break the equal-power principle. The management theory is that the merger, and the structure of the merger, gives one operating unit – AOL – primacy over a lot of formerly independent operating units.

It’s a theory.

Social issues. The root of Time Warner’s liberalism is that news and creative concerns are at least as important as business concerns. In New York, it’s the separation of church and state; in Hollywood, it’s the indulgence of temperamental stars; in the music industry, it’s … well, whatever it takes. AOL, on the other hand, likes to think of itself as an anti-content company. Not only does it not take the risks of developing content, it has largely built its fortunes on deals that rough up other companies that produce content (including a lot of instances of roughing up Time Warner). Content people, AOLers believe, are wimps – do-gooders, bleeding hearts, environmentalists. (Actually, AOLers believe everyone outside of AOL is a wimp.)

What’s more, the separation of advertising from content is just sophistry in the AOL world, a macho view that AOLers seem to take great pleasure communicating to the pantywaists in New York, Atlanta, and L.A. (the fact that these content pantywaists are some of the great internecine fighters, and that, on the West Coast, you even have content sissies who are thugs and criminals, will be part of AOL’s post-merger experience).

The theme. You gotta have a larger purpose in the takeover business – a reason for being, beyond more stuff and more power. Both Bush and AOL, having now accomplished their takeovers, are in the difficult position of being caught with backward themes. In Bush’s case it’s a mishmash of Reagan-era fiscal policies and tax cuts. For AOL, it’s a back-to-the-future promise of new media and the Internet in the days of a glorious nasdaq. Oddly, it is exactly this stuff – opening screens, IMs, chats – that continues to dazzle the people at TW (less, I suspect, than it dazzles people at AOL). Bob Pittman gave a speech at the American Magazine Conference saying that AOL had already sold 500,000 new subscriptions for Time’s magazines. This was briefly inspirational (before people started to pick apart the number). And there is still a lot of broadband, and movies-on-demand, and wireless talk at Time Warner. But I’d lay money on the tax cut coming sooner.

The media nation, like the actual nation, gets the leaders it deserves.


From AOL to W