Et Tu Steve Case?

In a recent episode of Rome, an HBO series where Caesar is brutally murdered by the Senate. The killing blow coming from Brutus, the man whose life Julius Caesar forgave. The gruesome scene was running through my head….

Steve Case sold Time Warner a bill of goods, aka America Online, gift wrapped in a ribbon of whole bunch of shenanigans that resulted in hundreds of millions of dollars in fines from Securities & Exchange Commission. He personally made hundreds of millions from the sale of AOL to Time Warner. He still has more than a $250 million stake in the company. Now he wants to break Time Warner up. Mr. Case’s essay in the Washington Post shows the man has chutzpah. Hey anything to boost the short term value of his $250 million in stock!

Break-up, after the debris from the A-O-Hell has been finally swept! I laughed at the comparison between AOL and Apple. I know a whole bunch of people are laughing with me! Read the essay, and you get a sense that Mr. Case fast forwarded through the first half of the decade. Cynthia Brumfield so succinctly writes….

Here Case is engaging in a little bit of revisionist history. He claims Time Warner failed to capitalize on AOL’s potential, but in truth it was AOL that acquired Time Warner. For at least a good year following the merger, the AOL-ites were calling the shots at the merged company and none too smartly either. Part of the reason Time Warner Cable, for example, didn’t race to embrace its new corporate parent and hurry to integrate AOL into its high-speed service was the dismissive attitude emanating from Dulles toward Road Runner and the cable guys.

How can he be suggesting the break-up strategy by looking at the past, when the future is finally beginning to align with Time Warner. How many time does one have to point to at Rupert Murdoch and predict the future? Time Warner, despite AOL is the only company which has it all, and can basically benefit if it plays its cards right.

  • Time Inc. creates the content which is valuable real estate for online advertising, currently the only media business where advertising is on an upswing.
  • AOL, after being a walled garden and a mess that Case & Co had created, is finally beginning to find its footing.
  • Time Warner, the entertainment business is the single and the most important line of defense Time Warner Cable has against the encroachment from phone companies.
  • The phone companies would still need HBO, CNN or whatever TWE has to offer.
  • With four-play, Time Warner Cable can make quite a bit of traffic.

In short, Time Warner reminds me that childhood tale – where five sticks when bound together, are unbreakable. When separated the sticks can be broken into little pieces. I hope Time Warner folks don’t pay attention to these forces who want to break up the company. Last company that followed the advice of carpet baggers, AT&T, ended up as a footnote in history. Michael Armstrong’s vision of a four-play – phone, TV, broadband and wireless- was right, but he did not have the desire to stand up to the Wall Street and a few individuals. Now everyone is indulging in four play. I think TW learn from that.

Mr. Case, if he wants us to take him seriously, should start by returning the profits from the “worst merger ever.” Otherwise he should go and spend them on his New Age enterprises!

(Disclosure: I work for Business 2.0 magazine, which like AOL is owned by Time Warner.)

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