Steve Case: Swimming With 'Suits'

News Google / Washington Post ^ | 1/14/2003 | David Ignatius

[ex-Texan]

Steve Case: Swimming With 'Suits'

By David Ignatius

Steve Case is licking his wounds today, following his resignation announcement Sunday night after two disastrous years as chairman of the merged AOL Time Warner Inc. But the hidden villain of this tale is the idea -- pushed as much by greedy Time Warner execs as by Case -- that profitable "synergies" would be created by merging Time Warner's content and AOL's distribution.

Those synergies never hit the bottom line. Shareholders waited in vain for the magic to happen, just as they have waited at other multimedia companies that had big ideas about forcing content down consumers' throats, such as Vivendi Universal and Walt Disney Co.

The happy fact is that consumers continue to seek content they like -- whether in magazines, on television, in movies or in online media. The merger mavens may be able to drive consumers toward the new mega-brands, but they can't make people buy what they don't like. That's what keeps the media business honest, despite all the dealmakers' machinations.

Case is blamed because he used AOL's overvalued stock to acquire the real assets and cash flow of Time Warner. But that was a smart strategy for an Internet company in January 2000, before the Internet bubble burst.

Time Warner was foolish to accept AOL's overvalued stock, and its shareholders have paid a severe price. But that's not Case's fault. Better to blame deposed Time Warner CEO Gerald Levin, who talked absurdly about 30 percent growth rates after the marriage with AOL was consummated.

Since the merger was announced, AOL shares have in fact fallen from a high of more than $70 to yesterday's closing price of $15.03, dragging Time Warner down with them. AOL did worse over the past year than the Nasdaq Composite, worse than the S&P 500, worse than Yahoo.

You could almost feel the schadenfreude dripping from the pages of an article in this month's Vanity Fair titled "Steve Case's Last Stand." Time Warner executives seemed to be competing to say bad things about Case, the man they blamed for dragging their stock options underwater as the Internet collapse and the post-merger troubles of AOL began to take the combined company down.

[ex-Texan]

Hey, no big deal ... The AOL and Time-Warner merger was not a good idea as we all can understand with the benefit of hindsight. Well, I had my own opinion of the marger at the time and it probably cannot be posted here on this forum. But, then, I hate AOL, have always hated AOL, and will always hate AOL.

Why? Aside from the fact that AOL provides third rate connectivity and lousy software, aside from the insidious software bugs they install to track their users; aside from the fact that AOL sells confidential information they learn about their subscribers ... they are an over hyped giant and I detest their business plan. 'Nuff said.

As a warning to AOL users out there: Do a FR search on the keyword 'Virus' ... My best guess is AOL's entire grid will collapse with the first hacker-cracker attacks by Iraq on our Internet. Just my private opinion. And what do I know anyway? Steve Case made all the money.

[goldstategop]

Yup. He leaves with a golden parachute.

[netmilsmom]

AOL=Internet for Dummies.
21.99 a month for the same internet I get on Juno for 9.95
Timesaver because of the keywords? So much spam is dumped in your inbox, it overrides it.
And finally (drum roll please) Parental controls? Put your computer in your living room and watch your kid!!!!

[bert]

....and I detest their business plan....

I am planning to use their business plan to get rich. My collection of in the wrapper AOL disks and CD's is looking better and better.

Any one out there with AOL version 2.* floppies you want to donate to my retirement?

BTW, this article is right on target, correctly describing the merger. It was not harsh enough though, it didn't say something like "a merger of losers produced yet a bigger loser"

[Oldeconomybuyer]

This is worth reading:

			Case Closed — By John Gibson I hate to crow about somebody getting fired, or forced to quit, but Steve Case of AOL has millions stashed away, so I'm going to anyway • Click Here for the My Word  Archive

 

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[ex-Texan]

Like I said, my own private and very hostile opinion about AOL could not be repeated on Freerepublic. Some Internet users are huge Dummies, even when you show them why they must get off AOL, they stupidly hang on. One reason is because AOL's software takes over their computers and they find it impossible to eliminate it.

Most of those folks refuse to speak with a technician about getting help to delete everything related to AOL ... stupid. Thank God I never had the misfortune to ever install their buggy software.

[goodnesswins]

DITTO to everything you said about AOL....I told my husband the stock he bought should be sold, but NOOOOOO, he didn't think so...... so, down from 60 to 15, where I sold it, and THEN told my husband.....I HATE AOL, always did, always will.

[ex-Texan]

Think that AOL could be sued by the subscribers because their software may be compared with crack cocaine ... Again, just my private opinion.

[Helms]

A Williams College graduate.

[Question_Assumptions]

I always think it is pretty funny when they blame the guy who was on the overvalued side of an equation for a takeover like this. Take Qwest's purchase of USWest. Who takes the heat for this bad deal? Qwest. If Qwest hadn't bought USWest, it probably would have wound up like Global Crossing. Sure, this was a bad deal for USWest but then shouldn't you be blaming the USWest management team that accepted the deal and not Qwest? Heck, if Qwest didn't buy USWest, Global Crossing would have and USWest would have been in the same boat. The only difference is that it would probably be Qwest that was bankrupt and not Global Crossing. But the bottom line is that Qwest and AOL did good by their shareholders. It is management of USWest and Time Warner that should be blamed because they did badly by their shareholders.

[alrea]

As a Forbes column said, Steve Case may the only guy that took profits at the peak of the internet bubble. He could not have made a better move.