Carrying the Lantern

Bill R.: Some things never change. For example, check out the first Christmas card, credited to Sir Henry Cole and John Horsley.

- Posted by William A. Riski - 9:37:22 AM - comment []

Bill R.: I'll admit, I read the article in The Washington Post because of the author. Steve Case opining on possible AOL-Time Warner breakup? Interesting. But it just struck me as a weak article. Mr. Case does NOT (IMHO) make a very compelling case for why the merger made sense in 2000, but no longer. Looks to me like there are two primary factors at work here. First, the original merger had to make sense from several perspectives: financial, vision, culture, product, customer. Second, if it was to work, the merger had to have follow-through within the new conglomerate. Seems neither of these were in place or came to pass. And maybe it's just me, but without a compelling argument today, I have a hard time believing someone who was the catalyst and vocal proponent of the merger in 2000, then left the company, now telling us 'Never mind'. I think Om M. does a better job of dissecting the current situation.

Et Tu Steve Case?.

In a recent episode of Rome, an HBO series where Caesar is brutally murdered by the Senate. The killing blow coming from Brutus, the man whose life Julius Caesar forgave. The gruesome scene was running through my head….

Steve Case sold Time Warner a bill of goods, aka America Online, gift wrapped in a ribbon of whole bunch of shenanigans that resulted in hundreds of millions of dollars in fines from Securities & Exchange Commission. He personally made hundreds of millions from the sale of AOL to Time Warner. He still has more than a $250 million stake in the company. Now he wants to break Time Warner up. Mr. Case’s essay in the Washington Post shows the man has chutzpah. Hey anything to boost the short term value of those $250 million in stock!

Break-up, after the debris from the A-O-Hell has been finally swept! I laughed at the comparison between AOL and Apple. I know a whole bunch of people are laughing with me! Read the essay, and you get a sense that Mr. Case fast forwarded through the first half of the decade. Cynthia Brumfield so succinctly writes….

Here Case is engaging in a little bit of revisionist history. He claims Time Warner failed to capitalize on AOL’s potential, but in truth it was AOL that acquired Time Warner. For at least a good year following the merger, the AOL-ites were calling the shots at the merged company and none too smartly either. Part of the reason Time Warner Cable, for example, didn’t race to embrace its new corporate parent and hurry to integrate AOL into its high-speed service was the dismissive attitude emanating from Dulles toward Road Runner and the cable guys.

How can he be suggesting the break-up strategy by looking at the past, when the future is finally beginning to align with Time Warner. How many time does one have to point to at Rupert Murdoch and predict the future? Time Warner, despite AOL is the only company which has it all, and can basically benefit if it plays its cards right.

• Time Inc. creates the content which is valuable real estate for online advertising, currently the only media business where advertising is on an upswing.
• AOL, after being a walled garden and a mess that Case & Co had created, is finally beginning to find its footing.
• Time Warner, the entertainment business is the single and the most important line of defense Time Warner Cable has against the encroachment from phone companies.
• The phone companies would still need HBO, CNN or whatever TWE has to offer.
• With four-play, Time Warner Cable can make quite a bit of traffic.

In short, Time Warner reminds me that childhood tale - where five sticks when bound together, are unbreakable. When separated the sticks can be broken into little pieces. I hope Time Warner folks don’t pay attention to these forces who want to break up the company.

Mr. Case, if he wants us to take him seriously should start by returning the profits from the “worst merger ever.” Otherwise he should go and spend them on his New Age enterprises!

(Disclosure: I work for Business 2.0 magazine, which like AOL is owned by Time Warner.)

By nobody@example.com (Om Malik). [Om Malik on Broadband]

- Posted by William A. Riski - 8:37:51 AM - comment []