The company you love to hate

A bevy of books are being written analyzing AOL Time Warner, with writers probing every nook and cranny of the merger deal and its dealmakers.

Almost every writer I run into seems to be at work on a book about AOL Time Warner, and I don’t sense those tomes will be love letters.

With Steve Case and Ted Turner huddled on the sidelines and Jerry Levin in love, courtly Dick Parsons may emerge as a one-man axis of evil. Writers and analysts already are lobbing missiles his way.

Revelation of its $100 billion net loss has further bolstered AOL Time Warner’s position as the company everyone loves to hate. And whole libraries will be filled with tomes scrutinizing every misstep and every “re-set” (a Parsons word).

Judging from present portents, the analyses will fall into one of the following genres:

  • The Easy Riders: Several books will focus on the principals (Bob Pittman along with Case and Levin), depicting them as corporate adventurers who had no more of a focused plan than did Dennis Hopper and Peter Fonda at the end of their classic biker movie.

    When Steve Case first tried to sell his deal to Sumner Redstone, the cagey vicar of Viacom told him he was out of his mind. Jerry Levin jumped on it, however, and Ted Turner was equally exuberant, according to Levin.

    Turner, who’s a sort of corporate Dennis Hopper, denies this, but then, “Ted always needs somebody to be his demon,” Levin told the New York Times last week.

  • The toys in the attic: Inevitably, some of the forthcoming AOL books will spotlight the various corporate units and the impact the merger had on them. The AOL conquistadors were especially intent on imposing their priorities on the Warner Bros. studio, even as the magazines were fighting off the mandates for synergy.

    At the same time the AOL rainmakers were running rampant, however, AOL’s numbers were, ironically, becoming squishier. By the fourth quarter of 2002, AOL, which once billed itself as a cosmic overachiever, was losing customers for the first time.

  • The smoking gun: A small army of investigative writers is at work to identify that one great boo-boo committed as a result of the merger.

    Some are circling around the weirded-out accounting of the cable system that counted upfront programming fees as advertising, thus inflating overall figures. As a result of revised accounting practices, about $50 million in supposed programming payments will disappear this year.

    Others point to underfunded pensions (perhaps to the tune of $100 million) or to multimillion-dollar make-goods to execs who were “rewarded” with stock options instead of performance bonuses. Then there’s the impact of massive writedowns on overvalued assets that could put bank debt covenants at risk.

  • The castaways: The expanding turmoil within the company, writers note, resulted in the dismissal of some of its most talented executives — people who actually ran important operating units.

    Warren Lieberfarb, who joined Warner Bros. with the rather prosaic assignment of running video, ended up fostering the development of DVD, only to be summarily terminated. Some of the journalists probing AOL Time Warner want to find out why a company about to release video and DVD versions of major franchises such as “Harry Potter,” “The Lord of the Rings” and “The Matrix” would choose that moment to dump an acknowledged industry leader.

    And shortly before Lieberfarb’s departure came the firing of Lorenzo di Bonaventura, who ran film production — another strong-minded, but perhaps non-corporate, innovator.

    Clearly, books about AOL Time Warner will scrutinize these and other personnel moves with keen interest.

  • The upshot: The problem with most business books is that they lack a solid third act. They set up intriguing conflicts, then fail to tell you their resolution.

    By the time some of these AOL Time Warner tomes reach their publication dates, however, some outlines of a “third act” might suggest themselves. Major divisions may be divested. Key leadership changes may take place. Further financial setbacks may trigger even bolder re-structuring. What Dick Parsons calls a “re-set” may transform itself into a vast makeover.

    Parsons is a master of understatement, and his idea of a “re-set” may be someone else’s notion of a revolution.

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