long time ago, in the days when evil empires threatened freedom-loving peoples
everywhere, there were a few men we were taught to fear. They led massive,
top-down international networks of true believers committed to infiltrating our
minds and way of life.
were called Chairmen.
you are an ancient relic like me, you remember the images and icons of China’s
Chairman Mao and the USSR’s Chairman Brezhnev. It was hard to picture them
actually chairing anything, but their power was awesome and their organizations
larger than life. Last week, I genuflected in the company of a Chairman with
even greater clout, although his name is less well-known.
am talking about Gerald Levin, Chairman of the Republic of Time Warner, soon to
become one of the helmsmen of the gargantuan TimeWarner-AOL combine. The
Communist chairmen wanted to convert us to their way of thinking. Levin wants to
convert us to his way of shopping. They wanted our minds; he wants "mind
share." They demanded political loyalty; he wants "sticky mass-market
consumer habit structures."
Levin was so popular that I couldn’t even squeeze into the packed hotel ballroom
in which he was offering a "fireside chat" (on a day when the
temperatures hovered in the 90s) to a small army of investors and financial
analysts. Mao led the Red Army; Levin appeals to an army that wants to stay out
of the red.
had to watch him with an overflow crowd in another room on a TV monitor at the
Morgan Stanley Dean Witter Digital Media Conference. Unlike the other industry
events I have been covering recently — the Media Summit and Digital Hollywood
– this one attracted really big fish, like Levin and Viacom’s overlord Sumner
Redstone The reason: It was not about ideas. It was a road show for investors.
It was about money.
format was relaxed, with two financial wizards conversing on stage with Levin,
who showed up tie-less. If you recall, his lack of proper business attire was
much commented upon on the day of the takeover/merger announcement. On that
occasion, AOL’s Steve Case wore a tie, while Levin was open-shirted, signaling
his intent to join the less formal yuppies of the Internet Imperia.
was no formal introduction because this was an all-in-the-family affair. We got
right down to business, with Levin being asked what investing minds need to
know. Where is Time Warner in the regulatory process in the U.S. and Europe?
was upbeat, explaining that the shareholders have embraced the deal by 97
percent margins, which sounds like what those old-fashioned Chairmen on the
other side used to claim about their rigged votes in manipulated elections.
truth is, shall we say, a bit more nuanced, as the Industry Standard’s Deborah
Asbrand reported that very same day: "Did Steve Case imagine he was in a
convergence nightmare on Friday? According to media reports, Case could be
forgiven if he somehow mistook the hotel ballroom where he met with
shareholders’ bared teeth for one of those bloody arenas in ‘Gladiator.’"
AOL shareholders OK’d the über-ISP’s merger with Time Warner," Asbrand
continued. "But the vote was close, The Washington Post pointed out. AOL
needed 50 percent of voters to approve the media merger, and it squeaked by with
55 percent. Time Warner shareholders were much hotter for the deal, registering
an 81 percent approval vote. But who really cares about Time Warner? Not the
media. After all, AOL was the visionary titan that was going to lead the New
Economy to greatness. Now its stock has tanked, and regulators are hovering. As
was the media. Case tried to calm the circling investors with the explanation
that ‘what’s happening really has less to do with AOL and less to do with the
merger and more to do with what’s happening in the sector.’ Or, as Bart Simpson
says, ‘I didn’t do it.’"
what about the regulatory process, in which the Federal Communications
Commission, Federal Trade Commission and the European Union are involved?
Chairman Levin was nonplused, revealing that the filing fees with government
regulatory bodies added up to $61 million. "Ironically," he quipped
with an air of disgust, "that’s about how much they are spending to
scrutinize what we filed." He made several other cocky comments about
regulators, who he believes are out of touch with what’s going on or trying to
"apply 18th-century ideas" to 21st-century technologies. His remarks
on this score reflect the probably accurate perception that private interests
are in the driver’s seat, with the public benefiting only through the consumer
choices they are being given.
"Glocally" Chairman Levin made clear that the world is his market.
"We do not want to be viewed as an American company," he proclaimed.
"We think globally." He announced that Time Warner controls music
companies in 37 countries and has begun to make movies in Europe through local
companies in their own languages. So, in essence, Time Warner, following in the
footsteps of Coca Cola, has gone from being a multinational company to being a
multi-local one. It is an expression of the trend towards the "glocal,"
a term coined by Ann-Britt Kaca, our MediaChannel adviser in Finland,
real hubris revealed itself when he was asked to compare Time Warner to other
mega-merged media corporations. He ticked off the nominal competition,
dismissing each in one sentence. Viacom/CBS? "Too ‘traditional
media.’" News Corp? "No new media strategy." Eisner/Disney?
"Watch their market cap." Vivendi? "No portal yet." Yahoo?
"Not enough revenue drivers." Microsoft? "In transition."
"We track everyone," he said.
understated conclusion: "No one is on [TimeWarner's] playing field
what a game this is. He seemed most comfortable discussing financial strategy
and his love of AOL’s Instant Messaging ("that was the hidden asset I saw
in the deal"). Market lingo flowed: exchange ratios, advertising market
share, multiple platforms, measured metrics, horde rate, e-commerce
transactions, EBOITA financing, estimated "excess" cash flows of as
much as $45 billion by 2005. This money will not be used to pay down the debt
but to acquire even more companies and assets. What’s big today plans to get
key profit center is music, which Chairman Levin referred to poetically as
"the harmony of the gods." He likes it because, in his words, it
"invests itself in your psyche." Unlike others in the industry, he is
not worried about Napster or MP3. They are good for stimulating demand, he said.
"Some music has always been given away for free via the radio or music
videos." But he and his colleagues want to "tame" the free
downloading in three ways: with intellectual-property legal claims, with
licensing of the kind that MP3.com is already agreeing to, and with ways of
encrypting or watermarking music. The key is to "take advantage of demand,
which they will be doing with new DVD technologies and what’s called a ‘digital
dashboard’" for cars. New "upscale, high-end products" are about
to be "deployed."
short, if you think you are getting away with something, think again. TimeWarner
AOL has plans for you. Financial writer Christopher Byron of the New York
Observer has written that this is a chairman who knows where the bodies are
buried, because he buried most of them.
Gerry has answers for everything and enough statistics to gag you. He’s proud to
confirm that the average amount of time AOL subscribers stay on line is now 64
minutes, longer than for any regular TV program. You could see by his
self-assured presentation why he makes the big bucks and was able to sell Time
Warner to AOL but still apparently remain in control.
was striking were two omissions. First, the investment bankers of Morgan Stanley
Dean Witter who invited him to their do did not list TimeWarner AOL among its
top picks for investors. They may have liked Levin as a draw for the conference
but not his company in their portfolios. What do they know that they — and he
–are not saying?
was the absence of any broader vision or mission besides generating and then
satisfying consumer demand. Unlike those Chairmen from other evil empires who at
least paid lip service to a world view, Levin’s view of the world seems
reflected primarily off a balance sheet. There were no great animating ideas, no
larger concerns. References to magazines like Fortune or cable news outlets like
CNN were only in terms of them as products in the mall. The public interest was
cited only in terms of how to interest the public in consuming more.
Sean Elder riffed on the two companies’ need for a better symbol for the merger.
The joint proxy statement sent to shareholders featured AOL’s "running
man" logo shaking hands with Bugs Bunny, Elder pointed out, but the AOL man
has no hands or even feet. I would prefer to see this replaced with the smiling
and reassuring countenance of Chairman Levin, my choice for the manager for all
as the Chinese keep an image of Chairman Mao on display in Tienanmen Square, why
not a giant billboard for the Chairman of Commerce in Times Square? And why stop
with Levin? Why not the full central committee of Media Inc. as a pantheon of
power, with giant photos of Disney’s Eisner, Newscorp’s Murdoch, Viacom’s
Redstone, CBS’s Karmazin, NBC’s Welch, Bertelsmann’s Middelhof, Liberty Media’s
Malone? And, sure, for the masses, we can throw in Dr. Laura Schlessinger, Jerry
Springer, the WWF and even Bugs?
Schechter produced 10 documentaries with Globalvision, where he serves as vice
president and executive producer. He is the executive editor of MediaChannel
and the author of "The More You Watch, The Less You Know" and
"News Dissector," a collection of his columns and writings,
available from Electronpress.com [LINK: www.electronpress.com/dschecter.asp].