When Warner Bros. CEO Robert Daly walked into the first post-merger gathering of senior Time Warner management in the Bahamas nearly five years ago, he felt a hand on his shoulder. It was a Time Inc. Brahmin whom he had never met. The magazine man asked the studio exec if he ever considered that General Motors buys $ 30 million worth of advertising in Time Inc. publications when he acquired “Roger & Me,” a cinematic indictment of the automaker.
Daly replied: No. Did you consider that Warner Bros. spent over $ 50 million on “Batman” before Time ran its lousy review of the movie? The Time exec smiled, patted his new colleague’s shoulder and suggested they both continue to do their jobs their own way.
Could be a model
That encounter could be a model for how the world’s largest entertainment company has operated in the five years since the March 1989 announcement of the merger. And while Sumner Redstone puts together his Viacom-Paramount “media colossus,” he would do well to study Time Warner’s freewheeling management structure. Unlike Rupert Murdoch’s autocratic sway over News Corp., senior Time Warner executives describe their company as a series of fiercely independent duchies that only pay obeisance to one central authority — namely, chairman Gerald M. Levin. It’s a Holy Roman Empire built on fiber optic cable, celluloid and glossy magazines with names like Vibe.
Externally, Time Warner is often criticized for a lack of synergy. But despite intra-division roughhousing that Levin likens to corporate “Darwinism,” Time Warner executives argue that their company’s organizational chart may be the model for future media conglomerates. “My philosophy is to let things happen naturally so they make sense from the ground up, instead of hammering it in from the top down,” Levin said. “We don’t say to the studio, you must come up with a project where there’s synergy. If there’s something that makes sense where divisions can work together, they’ll find each other naturally.”
To bolster his view, Levin points to the joint venture between HBO and Warner Bros. in Asia. He also notes how New York 1 News uses the resources of the magazine group, and how the Six Flags theme parks have attractions based on Warner Bros. characters like Bugs Bunny and the Caped Crusader.
Also high on Levin’s synergy list is the Full Service Network, an interactive cable venture in Orlando, Fla., that offers home shopping, banking and programming from the Time Warner library.
On the international front, TW has been the most aggressive of the Hollywood majors in seeking out strategic partnerships in various businesses — from a theme park in Australia to movie houses in Japan, from satellite broadcasting in Scandinavia to radio in the U.K. and cable in Hungary. And it is in the foreign arena that many believe some of the best opportunities for growth lie.
Certainly, the Time Warner marriage has had moments worthy of “Who’s Afraid of Virginia Woolf?” But with Seagram Co., led by COO Edgar Bronfman Jr., amassing stock and spurring rumors of a hostile takeover, Time Warner division chiefs are playing the happy family.
Family tragedies, though, have been a more familiar theme in Time Warner’s history — from Paramount’s hostile play for Time Inc. to the death of Time Warner chief executive officer Steve Ross in December 1992.