There Must Be a Pony in Here Somewhere : The AOL Time Warner Debacle and the Quest for the Digital Future
There Must Be a Pony in Here Somewhere : The AOL Time Warner Debacle and the Quest for the Digital Future
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Author(s): Swisher, Kara
ISBN No.: 9781400049639
Pages: 320
Year: 200310
Format: Trade Cloth (Hard Cover)
Price: $ 34.43
Status: Out Of Print

THE TRUTH, THE WHOLE TRUTH, AND NOTHING BUT THE TRUTH (or something like it) I Made a Little List Now, in the frigid and head-clearing morning of the new economy after the New Economy, everyone seems to agree: Time Warner was had by AOL. That is, at the turn of the new millennium, the world's biggest and arguably most influential media company merged itself with the highflying online giant and central icon of the Internet boom for a 44 percent stake in the combined company. The problem was AOL's business was soon to crater as that boom turned to bust, and its once lofty stock would become almost worthless. In this simplistic scenario, the trade of the century soon became known as the worst deal in history. This is most certainly the tale that has taken up residence in the stony prison of conventional wisdom: A wheezing and increasingly desperate traditional media company, scared of inevitable death (or worse still, irrelevance) in the hot swirl of a digital revolution, marries itself oV to the young, sexy and possibly sleazy starlet of the new-media society. Disaster ensues. And this merger has most definitely qualified as a disaster of belly flop proportions, by any measure you might care to use, which AOL Time Warner's own magazine, Fortune, dubbed "one of the greatest train wrecks in corporate history." The stock's 75 percent drop within two years of the deal's completion, the vicious purge of the top executives responsible for the merger, the investigations into dicey accounting practices, the poisonous atmosphere-all this has resulted in a constant barrage of ugly news headlines and poor morale at the company.


As I sit here in 2003 surveying the carnage, it is hard not to feel a bit queasy about the whole sorry mess. I had been following AOL's history-and the course of the whole commercial Web revolution-from early on, so it felt a bit like I was watching someone fall down a flight of stairs in slow motion, and every bump and thump made me wince. It made me reassess old ideas and wonder what I had gotten wrong. And it left me deeply confused as to what had happened and, more important, what was coming next. That was certainly how one of the company's largest and most vocal shareholders, Ted Turner, seemed to be feeling, too. Turner, the legendary media entrepreneur who'd gained as much fame for his headline-grabbing antics as for founding CNN, had begun ranting regularly about AOL Time Warner CEO Gerald Levin not long after the January 2000 merger announcement. In meetings, according to many sources, he'd call Levin a "liar and a thief"-when, of course, he wasn't discussing his separation and pending divorce from Hollywood star Jane Fonda, which the couple had revealed just a few days before the merger announcement. Things got only worse after Turner had lost $7 billion in stock value by the end of 2002.


"I'm poor, but I'm proud," he'd say loudly and often. And he took to showing up at the oYces of various Time Warner executives, where he'd turn his pants pockets inside out and cry out to anyone who would listen: "I was robbed." Turner was perplexed. Perplexed at what had happened in the deal, and perplexed at how he'd managed to lose more money in two years than almost anyone in the world had ever possessed. In December 2002, on the fifth anniversary of his $1 billion pledge to the United Nations, he announced to reporters, "I went from no money to a pile of money, just as big as the World Trade Center." Unable to stop himself despite the crassness of the comparison, he went on: "Then-just like the World Trade Center-Poof! It was gone." Possibly the most vexing part for Turner-though he never seemed to admit it in all his angry outbursts-was the knowledge that he'd done this to himself. Not only had he voted for the deal as a major stockholder; he'd also declared, without any prompti.



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