Stone Pigs

Posted By Alan Partis on January 13, 2010

I learned something today and I have to admit that I’m a bit stunned by it.  And while the things that “big business” and “big government” do shouldn’t really come as that much of a surprise to me, this one surely caught me off guard.

Ten years ago, our American corporate landscape changed with the all-time largest corporate merger: the marriage of America Online, Inc. and Time Warner Inc.  The result would be a behemoth media company spanning movies, cable television, magazines, and news industries all with a massive on-line presence and the audience of AOL (and those ubiquitous CDs we all received in the mail time and again — talk about a waste of plastics that are clogging our landfills today!).  Ah, the glory of it all.

At least that was how it was sold to the public.  It didn’t end up quite that way though.  No, in the end, it turned out to be one of the worst disasters in American corporate history.  OK, seriously, who didn’t see that coming?

In honor of the 10th anniversary of the onset of this failure, the New York Times published a story of the merger and its fallout¹ that was also picked up and published by Yahoo! Finance.²  It’s mostly a collection of statements from the various actors in the play that ultimately weaves the tale of how it all came together and then how it all fell apart.  Really, it’s a boring cautionary tale.

At least it was boring until I got to paragraph #8 where the paddles were applied to my chest and I was shocked back to the here and now.

The story casually introduces the two most iconic players: Gerald M. Levin (then chairman and CEO of Time Warner Inc.) and Stephen M. Case (co-founder and chairman and CEO of AOL).  In a most nonchalant manner, we are presented with a little background:

The romance between Mr. Case and Mr. Levin, they said in interviews with The New York Times, began in the fall of 1999 at a celebration of the 50th anniversary of the People’s Republic of China at Tiananmen Square.

Yes, you read that right.  I know, it shocked me too.  These guys, two chief executives about to embark on a landmark corporate merger — a most decidedly capitalist event — sat in Tiananmen Square joining in the celebration of the communist take-over of China and the deaths of 40-50 million political opponents of Chairman Mao.  Not to mention the thousands of individuals in 1989 who stood up peacefully for freedom and democracy, many of whom died right there, in that very square, at the hands of the very government putting on this night’s celebration.

Time Warner CEO, Jerry Levin is quoted:

I was seated for some reason in front of Steve Case and his wife and so we had a little chitchat.  It was a stunning evening to be a part of that history.  But this next thing that registered on me was that they seem to have a very sweet relationship and I liked that, and we had some fun, joked around, and so from a personality point of view we talked.

I can only speculate as to what motivated Mr. Case and Mr. Levin to attend (among the options are free will, a sense of obligation to the Chinese government and possible business partners, or even coercion), but Mr. Levin, for one, seems to be quite pleased to be there basking in the history and savoring the moment.  He found Mr. Case and his wife to be charming.  Isn’t that special?

AOL’s Steve Case seems no less enamored with the communist Chinese:

There was all kinds of hoopla and parades in Tiananmen Square and a state dinner at the Hall of the People, and I remember Jerry had decided to have the Time Warner board meet in China that week and they were on a trip but they also attended some of these functions, so at these different functions I talked to various Time Warner board members, but I don’t think I had any direct conversations with Jerry about the merger until probably a month later.

It wasn’t just these two titans of American business there in attendance, the whole Time Warner board of directors travelled there.  At this point, I began to wonder what other big names from the American business landscape, people who would normally be thought of as big believers in freedom and liberty and free markets, were in that square that night.  What other shameless communist sympathizers are piloting American corporate culture?

It’s easy to dislike Stephen Case after getting buried by all his free AOL CDs, and CNBC ranked Jerry Levin as the 16th worst CEO of all time³, but I was most struck by the fact that this little revealing tidbit was just presented by the NY Times journalists as something quite incidental to the rest of the story … as if it was mere window dressing, even admirable decorations, to the lessons to learn from the failure.  In and of itself, I find that quite revealing of the nature of the NY Times and their staff.

Personally, I find it more likely that the social and philosophical leanings of these men was really the underlying force behind the poor business decisions that led to the failure and the loss of thousands of jobs and a stunning amount of wealth.

I will never look at today’s Time Warner and its many subsidiaries the same way again.

————

¹ How the AOL-Time Warner Deal Went Wrong, The New York Times, January 12, 2010.
² How the AOL-Time Warner Merger Went So Wrong, Tim Arango, The New York Times via Yahoo! Finance, January 11, 2010.
³ The Worst American CEOs of All Time, Paul Toscano, Producer, CNBC.com, April 30, 2009.

Category: Foul Balls, Hypocrites
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