So here’s a bit of counterconventional wisdom: The only person who has
consistently been right about the disastrous AOL–Time Warner merger was its
architect, Steve Case.
I pause here to duck the shoes being hurled by my co-workers … But it’s
true. Consider:
Merging AOL with Time Warner in 2000 could have and should have been a
brilliant move, not just for Case, who made zillions by converting
high-flying Internet stock into real money,
but for the world’s biggest media company too. By the turn of the century,
it had become apparent that the value of content was plummeting as more and
more media were digitized. Time Warner’s video, music and print, and
especially its cable company, could have and should have rallied around AOL
as the solution. AOL and Time Warner Cable’s high-speed Internet arm,
Roadrunner, could have and should have merged, making AOL, that once golden
brand name, synonymous with a national broadband network.
And as that network grew and grew and grew, Time Warner’s content
divisions, from HBO to Time Inc., from CNN to Warner Bros., could have and
should have been at the forefront of the digital-media revolution,
leveraging that access against its powerful brands.
But all the coulds and all the shoulds couldn’t put AOL Time Warner
together again. I blame the company’s curious entrepreneurial
culture — curious because, while entrepreneurship is highly prized here, the
jefes who run the big operating units still prefer the safety and comfort of
a large corporation to the risk of running one’s own business. And that
creates powerful fiefdoms where divisions don’t cooperate with each other
and synergy becomes a bad word.
So in the end, Time Warner turned out to be the worst kind of
conglomerate, a case study in dysfunctionality. And once
again, it was Case who saw this. In fact, he argued in public in early 2004 that AOL ought to
be spun off.
Spinning AOL off is a good move for AOL. With his Google pedigree, Tim
Armstrong appears to be the right person for the job. AOL can soon sell its
own stock and raise money to do what big Internet companies must do,
especially now: buy the great start-ups that are creating the
future. The only question that remains is, What happens to the rest of
Time Warner That’s another story.
Watch TIME’s video of Peter Schiff trash-talking the markets.
See 10 ways your job will change.
