CNBC wades into AOL Time Warner turmoil
By Michael Speier
HOLLYWOOD (Variety) - In what could be the best example of bad business karma, Time Warner's marriage to America Online may forever be labeled a true scam.
Prompting coverage like CNBC's "The Big Heist," the union has become the goat du jour, with fighting factions, embattled leaders and pissed-off stockholders clamoring to find out how such a seemingly ideal relationship could find itself in dire straits so soon. In January 2000, the budding alliance was valued at $350 billion. It's now worth $63 billion, and AOL is just another part of the company.
Narrated by David Faber, whose daily Faber Reports have become a must-see for investors tuned to the money cabler throughout the day, "Heist" isn't about minutiae and doesn't have talking heads appraising stock prices. CNBC's first original documentary is an overall portrait of a collapse, maybe made a bit cynical by the fact that it's coming from TW's competitor -- GE vice chairman Bob Wright introduces the hour -- but a truthful one all the same. Like Sumner Redstone says in one of several interviews conducted with media toppers, "Very smart people made a very big mistake."
That's not kicking people while they're down. "Heist" makes it clear that not one industry insider thought the deal was a blunder. The Internet bubble was bigger than ever at the turn of the millennium, and branding and synergy were kings. The valuations created by mixing a traditional media empire with a new, youth-driven set made sense, and it even prompted Edgar Bronfman Jr. to put a "for sale" sign on Universal so as not "to be last at the altar."
The TW AOL bond was doomed from day one. Though TW chairman Gerry Levin had parlayed his vision into a powerful publishing and news kingdom, and Steve Case turned flat-rate fees into huge profits while building the best-known Internet service provider on the planet via subscription services, and, later, cyberads, it was a deal based on what-ifs. The attitudes were different and so were the people whose job it was to oversee the growth. On contract draft weekend, for example, "Heist" reports that the attorneys and managers had already begun to rub each other the wrong way. Ad sales, Time's principal trade for a century, was soon put in the hands of relative tyros who didn't know how to manage spreadsheets.
The special also chats with, among others, Barry Diller, John Malone, Michael Eisner and Michael Fuchs -- execs who knew Levin and understood the driving force that led him to a wired world. As former chief of HBO, he had always understood the importance of satellite carriage and the power of cable television. Too much, in fact, and Faber says that Levin and Case had rendezvoused at Manhattan locations for months before the announcement, a secretive move that dented trust; the stately Time Warner never got along with AOL's brash, high-fiving suits. One was rooted in the past, and the other had overblown value and profits that hinged only on potential.
Host: David Faber.
Videotaped in New York by CNBC. Executive producer, Glen Rochind; producer, Lori Gordon; writers, David Faber, Gordon, Rochind; coordinating producer, Liza Finley; editor, Gina Guerriero.
Reuters/Variety
01/13/03 03:09 ET
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