Kara Swisher's entertaining analysis of the fateful AOL Time Warner merger has only one real problem: It's the second hefty exploration of the deal in four months. America Online's founding, the career paths of execs, the genesis of the deal, and the demise of the Internet have been examined in Alec Klein's recent book, "Stealing Time."

Kara Swisher’s entertaining and sharply written analysis of the fateful AOL Time Warner merger has only one real problem: It’s the second hefty exploration of the deal in four months. Business junkies will always welcome fresh tales of a pigheaded Gerry Levin or a boorish Steve Case. But many chapters of background — America Online’s founding, the career paths of key execs involved, the genesis of the deal, the clash of cultures and the demise of the Internet, the stock and AOL’s business model — have been examined in countless articles and in Alec Klein’s recent book, “Stealing Time.”

The debacle has anecdotal riches to spare: Like AOL’s notorious head of business affairs David Colburn making up T-shirts that read, “Putz, we are.” That was a response to a Time Warner exec who admonished Colburn during a weekend of due diligence, “You’re making it sound as if you’re buying us.”

Or, like less-than-socially-adroit Case telling Swisher: “I was just looking out at this rain,” he said in a dreamy tone, “and thinking, ‘If she gets in a fiery wreck, I won’t have to do the interview.’”

How about Gerry Levin musing to Swisher about his “profound love” for psychologist and former CAA agent Laurie Perlman in January of 2003, some months after he’d left the company with its morale and share price in tatters. “I’m not interested in setting the record straight for anybody,” he said, still insisting the merger will shake out “into something right.”

What’s nice is that Swisher’s account is highly personal. The Wall Street Journal reporter recounts her amazement and confusion at the warp-speed growth of the Internet and the riches and excesses that came with it. Her thoughts, her jokes, her meetings and interviews in her years covering the nascent industry make up much of the book, which is written largely in first person.

Swisher’s meaty epilogue is excellent, a forward look at AOL’s current challenges and choices with suggestions for where to take the service from here. It’s also a passionate defense of the Internet’s future, despite missteps and setbacks.

Netcos, she says, were often no more than “purveyors of email, sex and celebrity chat and endless pop-up adds for doodads” with delusions of grandeur engendered by fabulous wealth. Arrogance was honed to a fine art at AOL and hit a high after the Time Warner merger. That’s when, she notes, Case developed a “King of France walk … an unusual statesmanlike gait, perhaps due to his newfound importance in the world.”

But the image, the concept — new media being wedded to old — trumped reality. “The deal announcement was an orgy of high-fiving and self congratulation,” Swisher writes. “By declaring victory immediately, the group in charge set in motion a pattern of overpromising and underdelivering that would make meaningless any forward movement at the combined company under the questionable mantle of synergy. The result was that whenever anything was actually accomplished, it looked very small, throwing off a sad little is-that-all-there-is vibe both externally and internally.”

“We can’t show any weakness,” Bob Pittman warned his fellow execs. Early on, they promised investors a lofty $1 billion in cash flow improvement from the deal — bumped up from an already inflated $800 million because the higher number, said one AOL exec, was “optically attractive.”

Time Warner investor relations head Joan Sumner Nicolais was dubious. “I’ve looked at the numbers and I don’t see where you find one billion,” she told AOL’s chief financial officer Mike Kelly.

“You don’t know where,” Kelly replied, “but I do.”

Meanwhile, a deep resentment in the trenches festered as the stock kept slipping. AOL folks pushed too hard. Time Warner execs, Swisher implies, protested loudly but never gave an inch. One wonders if total disaster could have been avoided with more cooperation. If AOL was given immediate and unfettered access to exclusive content, for instance, or to Time Warner’s cable lines, would it have made a difference?

Or, what if AOL had bought some other company? In a funny passage, Swisher describes how AOL brass was negotiating a takeover of eBay on the same day and in the same building where it hashing out final details of the Time Warmer merger. AOL execs shuttled between two conference rooms “alternately apologizing to and ignoring (eBay CEO Meg) Whitman and her team. The eBay group had no idea what was going on down the hall, and some wondered whether AOL’s culture had bred attention deficit disorder.” As she left, Whitman told Pittman, “‘You have a lot going on here, it seems.’ … She had no idea.”

There Must Be a Pony in Here Somewhere: The AOL Time Warner Debacle and the Quest for a Digital Future

Crown; 289 pgs.; $24.95

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Kara Swisher

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