Around the corridors of AOL Time Warner, the response to Chairman Steve Case’s resignation under pressure seems to be, “Better late than never.”
There is a lot of festering anger in the ranks of employees and stockholders. Three years after the takeover of Time Warner by then-high-flying America Online, the deal is widely viewed as a failure. Many stockholders, including the employees of Time Warner, have taken a bath. Many thought Case had to go.
Remember, though, that Case was one of those rare people in business who had a vision and the chutzpah to pull it off. He built America Online into a pioneering Internet juggernaut. Then he engineered the bold-stroke takeover of Time Warner as the murky stew of the 1990s bubble economy was reaching a boil. Marry top-drawer news and entertainment properties in the Time Warner stable–Time, People and Sports Illustrated, CNN, HBO, Warner Bros. etc.–with the surging AOL.
Blue chip content and 21st Century delivery mechanism all together in one happy house. Advertisers would drool and synergies would abound like sparks from a shooting star, Case promised. It has, so far, turned out to be a black hole for those whose stock holdings have lost billions of dollars in value.
The 44-year-old Case will remain on the company board and says he hopes to focus on long-term strategy. “I am stepping down but not walking away,” Case told The Washington Post. He still believes the merger was a good idea. “I understand the conventional wisdom at this moment is otherwise,” he said.
That’s an understatement.
Case must be credited, though, for being a brilliant pioneer who grasped the Internet’s potential and introduced it to the masses. Tens of millions took their first tentative steps on this newfangled information superhighway via AOL.
The trajectory of this company mirrors the tech bubble and the dismal aftermath of its bursting–right down to the ongoing Securities and Exchange Commission and Justice Department investigations into whether AOL improperly inflated its revenues.
The deal itself caused people to shake their heads in disbelief. Venerable Time Warner being taken over by upstart AOL? Shouldn’t it have been the other way around? No, not when AOL’s stock was soaring and the boom was creating a sense of urgency that those companies that didn’t hook their wagons to a 21st Century high tech something-or-other would be left behind.
Case quieted the skeptics by pointing to what he had done with AOL. Shortly after the merger, though, the company’s stock and prospects were hammered by the bursting bubble and the worst advertising drought since the Great Depression.
The conventional wisdom now is that, reflecting a hubris common to the era, Case over-reached. Just a few years ago, of course, the conventional wisdom was that the kid Case and his upstart AOL would get trampled by mighty Microsoft. That didn’t happen.
Case is departing from the helm of AOL Time Warner. It might be a mistake, though, to consider his vision dead and buried. Not just yet.
