Customer Reviews

Stealing Time : Steve Case, Jerry Levin, and the Collapse of AOL Time Warner

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A review of Simon Schuster's new book, "Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner," by Alec Klein

First, I must issue the following disclaimer: I am the "aging flower child" in Mr. Klein's new book, entitled "Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner." That said, I think that my perspective as a spokesman for a small ISP from the Midwest allows me an overview unlike anyone else discussed in the book.

Overall, "Stealing Time" has established a standard for reporting on AOL and the AOL Time Warner merger that will be hard to top. If Mr. Klein's original reporting on AOL and the merger is the first draft of history, then his new book represents a first-rate second draft. No other reporter I know has had access to more sources and actors in the AOL Time Warner drama than Mr. Klein. His coverage of the early days of Steve Case and the company that would become AOL was particularly informative for the general readership.

Besides the use of impressionism, the narrative achieves a terseness and non-linear quality that does much to engage the reader. At each stage, one has to reflect on the individual anecdote and where it fits into the historical process of the current state of AOL Time Warner's evolution.

Another strength of the book is the author's ability to provide well-rounded caricatures of all the various players, large and small, who peopled this technological passion play. In particular, I was captivated by the chapter entitled "AOL Versus the World," and not just because I am part of it. The cast of characters described includes the usual suspects for any large merger: dueling CEO's, a panoply of PR types, a motley collection of merger opponents, consumer groups representing various constituencies, large government agencies like the FTC and the FCC, Capitol Hill denizens, the national media, and the American public. Mr. Klein captured it all with an accuracy I can vouch for.

From the beginning of October 2000 to the merger approval on January 11, 2001, the whole notion of inevitability was brushed aside by the revelation that both companies, AOL and Time Warner, were telling the politicians and regulators a half-truth about their plans to allow other ISP's access to their cable's high speed Internet product.

Ultimately, the Term Sheet being sent to ISP's like Earthlink and other applicants was a contract no one could ever sign. It's anti-competitive features helped dramatize the fact that AOL Time Warner could not be trusted to execute their promise of open access. Arguably, they lost all of their creditability once the Federal Trade Commission and the Federal Communication Commission finally saw it. As I said at the time, "the term sheet was so anti-competitive that Joseph Stalin could barely have improved it."

It was hardly surprising that Time Warner, then the second largest cable company in the U.S., would build an insurmountable barrier to entry. They after all were granted geographical monopolies to all of their cable territories from the start. When Time Warner kicked ABC/Disney off their cable networks out East in May of 2000, they provided a large example of the power such a monopoly has over access and content. AOL itself had perfected the "walled garden" on its Home Page. By controlling the access of its customers to the Internet AOL could drive them to its advertisers goods and services.

Even after the merger approval, AOL Time Warner was caught denying advertising placement to other ISP's for dial-up and DSL services at the exact time their ad revenue was shrinking. In all of history, no monopoly ever gave up its coveted position willingly.

AOL, on the other hand, had fought long and hard for ISP Open Access to all cable companies' high speed Internet infrastructure before their merger announcement of January 10, 2000. In fact, Steve Case gave a speech in San Francisco, CA about Open Access while at the same time he was in secret negotiation with Time Warner. To combat charges of hypocrisy, AOL and Time Warner issued a "memorandum of understanding" on February 2000 that supposedly guaranteed access to all interested ISP's. The trouble was that the memorandum was unenforceable and the term sheet for access was a draconian nightmare no one could sign. Open access became, as a participant in the negotiation between the two companies, "our huge bugaboo."

AOL certainly revealed their willingness to play fast and loose with the truth. They would do anything to get the largest merger in U.S. history done, especially since it would give AOL privileged access to the broadband technology they so desperately needed.

Like many other Internet companies, AOL had used aggressive accounting practices for reporting marketing expenses, whereby they became a depreciable asset instead of an immediate expense of doing business. Upon reflection, this was one of the first examples of a company without an ethical compass.

We all should have worried when Steve Case told the media in the euphoria of the merger announcement: "We want to be the most respected company in the world."

Thank goodness, Mr. Klein did his job as an investigative reporter by uncovering much of the unseemliness; and now, he has done his job as a business storyteller by revealing many of the truths about the largest debacle in the business history of the U.S.

This is a terrific new book by a Washington Post reporter who followed AOL for the newspaper through its ups, its way ups, its downs and its way downs (now). The most appealing part of the book is that the subject is approached without malice. Klein could have taken a muckraking, expose the crooks attitude, but he did not. Perhaps this is because he spent so much time with "the boys at AOL" during the time he covered them for the Post.
The book appears to be very thoroughly documented and balanced. In the end, however, we are left with one, strong conclusion: AOL cooked the books to get the merger done with Time Warner and continued to cook them as long as possible to keep the numbers up after the merger. They did so, as has been documented previously, by booking phony ad sales when money flowed both ways and counting as revenue money that had not yet arrived.
This book is lively, a quick read and not harshly judgmental toward AOL, even while presenting strong indications that negative judgments would be justified. As at other high flying enterprises in the 1990s, AOL people often used company money like it was Iraqi dinars looted from the central bank. The "expensed" lavish trips and parties and rode their stock options to the stars. Almost every reference to Steve Case finds him in a different city, often other continents. Why work when you can travel in high style?
There is no doubt that a kind of stock and money madness enveloped AOL. Perhaps the most disturbing aspect, for some, will be the revelations about how much money was wasted both by AOL and its stock optioned employees on their own. While the record is shocking, I have a feeling that Klien barely scratched the surface in this regard.
It is clear, from this book and other reporting, that AOL should never have taken over Time Warner, any more than a mouse should try to eat an elephant. AOL was flying high on the combination of its subscriber revenues, temporarily inflated ad revenues and, more importantly, the expectations of investors that the Internet had no known limits (it did). Most of this had to be known Steve Case and his high spending, high flying group at AOL. They went ahead with the merger anyway, at all costs. Turns out, they lost their jobs and, for many of them, their fortunes. This was not a good merger that went bad, this was a merger that should never have even been considered, much less finished.
This book should be interesting to anyone who follows American business, who invested in tech stocks during the gold rush and anyone else who simply wants to learn about human nature and money. Highly recommended.

I have a feeling that once the smoke clears, it will be the customers who pay the price for the AOL Time Warner debacle. I say this as a reader of this book and a consumer who has pulled my hair out trying to deal with both companies after the merger only to discover the right hand didn't know what the left was doing.

Klein's reporting brings clarity and insight to those of us who don't quite grasp the goings on at AOL Time Warner. It also provides us with a better understanding of the hostility many in the business world seem to have toward AOL. The internet officials seem to have had constant ethical lapses, often played it fast and loose with their competitiors, and bullied their supposed business partners.

Greed seems to be the overriding principle here as Steve Case and Jerry Levin, two very different individuals joined their companies together. The "old media" Time Warner was not prepared for new kid AOL, a company which seems to have operated since it's beginning with an illusion of greater financial success than it actually had. One wonders if a little investigation by Time Warner officials into AOL's practices could have avoided the disaster.

Klein successfully pieces together how in the end, Case and Levin are undone by their own arrogance and people such as Ted Turner and Dick Parsons, colleagues they grossly underestimated.

Klein's ability to get inside AOL is the key to this book. His sourcing is excellent and his description of the key characters such as the blander than bland Steve Case makes it a colorful read. The compelling dealmakers combined with the big stakes involved in the largest US merger ever made it just possible to slog through his account of the fraud AOL perpetrated to keep its merger with Time Warner on track. Essential stuff, but challenging nevertheless.

His penetration of Time Warner wasn't as strong, but his interviews with Jerry Levin paid off. The former Time Warner CEO comes off as a complex and troubled leader and I love the image of him getting out of his limo in his old neighborhood to ponder life.

Despite the impressive journalism at work, I was left wondering where was Time Warner's due diligence or AOL's accountants when all of the sales shenanigans were taking place in Dulles in 2000? Also, Klein never addresses the question of whether or not the merger was a good one for AOL shareholders on a monetary basis despite the troubles the two companies have had coming together? Wouldn't its stock have declined dramatically anyway? At least now, they own 55% of the world's largest media company. Also, A few of Klein's comments seemed a bit pompous such as his assertion that Jordan's Queen Noor is the Grace Kelly of our times. Huh?

Overall, it's an impressive reporting achievement and a good read as well. Anyone interested in mergers, the media business or the Internet boom and bust should pick this up.

This is a terrific new book by a Washington Post reporter who followed AOL for the newspaper through its ups, its way ups, its downs and its way downs (now). The most appealing part of the book is that the subject is approached without malice. Klein could have taken a muckraking, expose the crooks attitude, but he did not. Perhaps this is because he spent so much time with "the boys at AOL" during the time he covered them for the Post.
The book appears to be very thoroughly documented and balanced. In the end, however, we are left with one, strong conclusion: AOL cooked the books to get the merger done with Time Warner and continued to cook them as long as possible to keep the numbers up after the merger. They did so, as has been documented previously, by booking phony ad sales when money flowed both ways and counting as revenue money that had not yet arrived.
It is clear, from this book and other reporting, that AOL should never have taken over Time Warner, any more than a mouse should try to eat an elephant. AOL was flying high on the combination of its subscriber revenues, temporarily inflated ad revenues and, more importantly, the expectations of investors that the Internet had no known limits (it did). Most of this had to be known Steve Case and his high spending, high flying group at AOL. They went ahead with the merger anyway, at all costs. Turns out, they lost their jobs and, for many of them, their fortunes.
There is no doubt that a kind of stock and money madness enveloped AOL. Perhaps the most disturbing aspect, for some, will be the revelations about how much money was wasted both by AOL and its stock optioned employees on their own. While the record is shocking, I have a feeling that Klien barely scratched the surface in this regard.
This book should be interesting to anyone who follows American business, who invested in tech stocks during the gold rush and anyone else who simply wants to learn about human nature and money. Highly recommended.

First, the style of this book makes for a great and enjoyable read.

The story begins with the background of an eccentric entrepreneur who has a tendency to have great ideas with a lot of flash, but a terrible habit of spending all of the money he borrows and asking for more. The idea he has come up with now is to have video games on subscribtion to people's homes. Knowing he will soon run out of money he hires his banker's brother to come on board (if we hire his brother he'll give us more money later). The banker's brother was working at Pizza Hut in marketing. His duties entailed tasting the pizza in various stores and his name was Steve Case!

Through this book you can watch Steve Case go from shy and unsure business plebe to a high powered and fast moving CEO who was groomed over many years to become one of the most iconic executives of the late 20th century.

There are also other details that are very interesting such as the insider trading schemes that made the AOLers very rich; investing in companies they were about to close deals with and then selling their shares as soon as the press release hit and that company's stock went up. There are stories of abusive power among the ranks and the major rivalry that came of the merger with Time Warner.

This is a great book for anyone interested in business stories.

Stealing Time provides a lot of details on the individuals involved in the AOL Time Warner merger, but no business perspective.

AOL overtook CompuServe, Prodigy and other on-line services to become an industry leader with a market capitalization greater than General Motors. Was this due to luck? Or good decisions? Was it because of Steve Case, or in spite of Steve Case? Stealing Time tells us about Steve Case's personality quirks, but it doesn't look at the business context to tell us if he was a flawed genius or a lucky flake.

The AOL Time Warner merger was severely troubled. But was it a brilliant idea killed by bad execution, or a false view of synergy doomed from the start? Stealing Time gives us the personalities and boardroom maneuvers, but no context to know if thie was a tragedy of missed opportunities or simply a comedy of errors.

So if you are interested in the clash of personalities, Stealing Time has some good material, but if you are interested in why AOL was successful and why AOL Time Warner was not, this book doesn't have anything to say.

Although I have read a lot about the AOL-Time Warner merger and its aftermath, the national financial press did not do full justice to the story. Stealing Time does, however, and I highly recommend the book to you.

Alec Klein has a particularly good vantage point, having covered AOL for two years for The Washington Post. In the course of that assignment, he discovered that AOL was using sleazy advertising sales practices and illegal accounting to "achieve" its earnings growth. Primary motives for these despicable practices were power hunger, greed and a desire to pump AOL stock while the merger was pending (it was an all-stock deal). When the book focuses on those parts of the story, Stealing Time is riveting reading.

The bulk of the book covers what Time Warner was thinking (apparently not very much) as the merger developed and was pursued through the regulators . . . and the very ugly aftermath while AOL collapsed and the absurdity of the "synergy" concepts were exposed as bankrupt.

The book is enlivened by many anecdote-rich episodes (such as Jeff Bewkes calling Steve Case out in an executive meeting) and detailed interviews with those involved.

You will also get many insights into why so many dot-coms failed. AOL was stripping those who needed its advertising of as much cash flow as possible through indefensible negotiating tactics.

The advertising sales practices described here rank with the accounting at Enron as the sleaziest business actions taken by a major company that I have read about. It's enough to make you want to cancel your AOL subscription! . . . if you still have one.

If I liked the book so much, why didn't I rate it at five stars? Well, I think the book should have focused more on AOL and less on the aftermath at Time Warner. The inevitable shuffling of the deck chairs among the soon-to-be-fired or -retired executives isn't all that interesting. Sure, Time Warner was abused by AOL. But watching all of the ugliness of the abuse didn't make the story any better.

As I finished the book, I realized that any time that a "big picture" CEO is looking for partners . . . that's a recipe for disaster. Avoid those stocks!

For twenty-five years I have worked in my own small computer technology company. As an engineer I guess I admire most those who have made technical contributions; but, with a few exceptions, the most influential and perhaps the most interesting technology leaders are not scientists and engineers. This is abundantly clear in "Stealing Time," the not always balanced story of the AOL Time Warner merger and the subsequent problems. The focus is on the personalities and interactions of key players, especially Steve Case, Gerald Levin, Bob Pittman, and Ted Turner.

The book reads quickly, like a three-act play. In Act 1, in the midst of the Internet hype, AOL and Time Warner circle about in search of the ultimate merger of old and new media. In Act II the deal is done after long delays for regulatory approval. In Act III as the giant's stock price, revenues, and prospects fall well short of the original projections, all the persons on stage for the January 10, 2000, press conference announcing the deal fall on their swords except for Richard Parsons, now Chairman and CEO.

The book introduces each of about ten key players with a brief and interesting biography as they first appear on the stage of this fast-moving drama. I didn't put the book down once I started it. This is a people book, a good read, not a business book, not a technical book.

The book, by hinting at corporate deception at AOL and suggesting personal failures of nearly the entire executive team, may be a bit unfair. The merger diverted the attention of the team for more than a year as unexpected, fierce opposition at the FTC (well orchestrated by competitors) delayed closing the deal. The merger was consumated in Janury 2001, two months before technology stocks began their swoon - causing immediate pressure on AOL ad revenues as dotcoms bit the dust.

I have followed AOL closely since 1990. For a typical home user the AOL online experience by 1992 was not far from today's Internet online experience (email, chat, shopping, news, entertainment). The technology of course was proprietary and not the http-TCP/IP technology of the Internet. AOL, CompuServe, and Prodigy and their founders deserve as much credit as the technology companies for creating the Internet age. This book, an account of a deep-draft AOL going aground, does not diminish my admiration for AOL's important role in the development of our Internet society. A case can be made (but not from this book) that AOL was the most important player in the 1990s in the explosive growth of an online society.

The author (and playwright), Alec Klein, is a Washington Post investigative reporter who blew the whistle on AOL revenue accounting shenanigans. He has a nice style and, although critical, is at least somewhat sympathetic to the characters.

Its a pretty easy read and somewhat entertaining, but the subject matter lacks the depth necessary for a good business book. The overall story is that of an immature and flawed company with no lasting value in a hot sector, AOL, which merges with an established but eccentric blue chip media company,Time Warner. What makes this merger possible is Wall Street's misguided opinion of the long term value of AOL, and the misjudgement and agressiveness of an aging and personally stressed CEO.

To much of the book is spend examining the mind and personality of AOL's Steve Case. This would be similar to dedicating a significant amount of a cook book to describing the culinary delights of a rice cake.

A good beach read. You will not grow as a human being or business person by reading this book though.