Early in "Stealing Time," Alec Klein's deft account of the genesis and collapse of the nation's biggest media merger, Jeff Bewkes lambastes Steve Case at a meeting of top execs as the former AOL chief drones on about synergy and convergence. The outburst was Case's first public dressing down. It wasn't the last.

Early in “Stealing Time,” Alec Klein’s deft account of the genesis and collapse of the nation’s biggest media merger, Jeff Bewkes lambastes Steve Case at a meeting of top execs as the former AOL chief drones on about synergy and convergence. “This is bullshit. The only division that’s not performing is yours. Every one of us is growing, making the numbers. The only problem in this construct is AOL.” Dead silence. The outburst, which Klein says was sanctioned earlier by CEO Richard Parsons, was Case’s first public dressing down. It wasn’t the last. Klein doesn’t draw conclusions, but his solid, fast-paced account attributes the debacle to a convergence of hubris and bad judgment by an eccentric mix of characters at a particular moment in history. There are no new revelations — the story’s been picked over too many times before. But Klein offers an entertaining window on the times and personalities that turned a grandiose idea into a first-rate mess.

Months after that fateful meeting, Case had resigned as chairman of AOL Time Warner. His merger partner, Gerald Levin was gone, so was his top lieutenant Bob Pittman. Bewkes and former Time Inc. topper Don Logan were firmly in the saddle, reporting to Parsons. AOL Time Warner stock was a dog.

The meltdown was triggered in part by Klein’s own yearlong investigation into AOL’s accounting. The two-part story, published in The Washington Post last summer, helped launched probes by the Department of Justice and SEC that are still ongoing, leaving open the last chapter of the AOL TW saga. Not to worry. Vanity Fair’s Nina Munk dissects the deal in another book due in 2004.

Klein is particularly good chronicling what he knows best: How America Online’s brutally tough dealmaking slid into something more sinister under intense pressure from Wall Street and top managers trying to close the merger. Pricey long-term ad contracts AOL foisted on fellow dotcoms backfired when the Internet bubble crashed and many of those companies couldn’t pay. AOL couldn’t take them to court since that might have required public disclosure of its own weakening finances. Klein doesn’t defend AOLs early Master of the Universe mentality. But he makes it understandable. What a rush to join a tiny start-up, grow it into a household word in a new medium with 30 million subscribers and advertisers banging down the door, and make millions of dollars in the process.

At the vortex of the go-go 1990s Net culture was a mania for stock options. That obsession, a hallmark of AOL created “an almost perverse incentive to prop the stock up at almost any cost,” said one exec. AOL’s former head of business affairs, David Colburn, the guy behind all those allegedly shady advertising and barter deals, once invited three rabbis to a company party to pray for the stock price. Years later, Colburn, one of the spiciest characters in Klein’s drama, hurled an expletive at courtly Dick Parsons as the Time Warner exec walked down the hall to a board meeting to be named CEO. Colburn was fired and his division dismantled after AOLs questionable accounting grabbed the headlines last year.

Klein leaves it vague as to how much Case knew of the financial shenanigans in business affairs. But he reminds us in so many words that Case showed true strategic genius in clinching the Time Warner deal. It’s almost funny to recall now that in early 2000, AOL was still so hot that its shareholders were hopping mad at Case’s decision to weigh down their stock with old media. But Case knew the high-flying stock would fall — he said so — and that he had to do something fast. For him, the deal was about “capital preservation” and little else.

Even Case loyalists describe him as awkward and deadpan. (In Klein’s book the nice names are “The Wall” and “Lower Case”). His personality was a major drawback in negotiating with regulators to get approval for the merger — especially side by side with a testy and charmless Gerry Levin. As the duo hit D.C., their arrogance turned what might have been a rubber stamp by regulators — or close to — into a pitched battle that emboldened their critics and ended with crippling concessions by the new company.

During a meeting at the Federal Trade Commission, commissioner Mozelle Thompson said he’d been watching ABC in New York when Time Warner cable pulled the plug on the Disney network in a contract dispute.

Case nudged Levin, “Way to go, Gerry.”

Later, “Case defended the merger by explaining that he had gotten so rich that, with this deal, he could focus on doing good deeds. The part about his good deeds got lost. What stayed in the minds of some of those in attendance was how Case had boasted of becoming so rich.”

Like Al Gore in the last election, these two were crying out for some good handlers.

With the deal done, the culture clash was enormous. The “Assholes Online,” as Time Warner execs dubbed AOLers, were indeed overly pushy. “You are so fucked,” gloated one to his Time Warner colleagues. But the “old media” folks didn’t give an inch, they didn’t budge. Was it really quite so horrific of AOL to ask TW to line up Mel Gibson for the “You’ve Got Mail” voice? Still, it’s not likely a real effort to collaborate would have made any difference to the demise of the merger, which was linked almost entirely to the drop in AOL Time Warner’s stock. Klein doesn’t really address AOL’s major challenges, but no amount of synergy could stop broadband from encroaching the service or stem the loss of AOL’s dial-up customers.

At the top, alliances were a shifting source of fascination. Levin marginalized Ted Turner. Then, Case and Turner joined forces to oust Levin. Parsons, with Case’s tacit consent, eased Pittmans’ exit. Turner and influential fund manager Gordon Crawford pressured Case to step down.

In this book, Levin comes off the worst, from the monumental to the petty.

Levin told Klein that in his last meeting with AOL TW’s board after he’d resigned he subjected them to a two-hour history of Time Inc. through AOL Time Warner “because no on in the room had really been there and it’s pretty interesting.”

So true.

Stealing Time: Steve Case, Jerry Levin and the Collapse of AOL Time Warner

Simon & Schuster; 352 Pgs.; $26

Production

Alec Klein
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