“Thank God,” one upper-level staffer at a Time Warner magazine told NEWSWEEK on condition of anonymity. “It was as if it was the Middle Ages and we’d been leeched for three years. There was almost no blood left. And finally, they realized this method of treatment wasn’t gonna make the patient any better.”
Indeed, Case’s resignation has raised the tantalizing possibility–tantalizing at least within the company’s magazine division–that a divorce, or at least a separation, could be in the making. “Divorce seems like the only option,” magazine expert Samir Husni told NEWSWEEK on Monday. “This is getting one step closer to formalizing a divorce. In the history books, that merger is going to be one of the biggest mistakes in business that ever took place.” At the magazine headquarters, staffers were also openly talking about the possibility of a spinning off–or even an outright selling–of the AOL division.
Husni thinks Case’s departure will mean the continued ascendance of Don Logan, currently the chairman of AOL Time Warner’s media and communications group. Within the company, Logan, along with current CEO Richard Parsons (who last year replaced Gerald Levin) and former HBO chief executive Jeffrey Bewkes, are seen as the three men most likely to vie for control of the company. As one media observer and former Time Inc. staffer put it, “One wonders, with Case–and, more generally, festering anti-AOL rage–out of the way, how the Bewkes vs. Logan vs. Parsons power triangle will play out. They can now focus on killing each other rather than killing Case.”
Case’s departure is already being described as another one of the seemingly endless final nails in the coffin that will bury the Internet boom of the go-go 1990s. When Case orchestrated AOL’s merger with Time Warner almost three years ago, the Internet boom was just past its peak and the corporate accounting scandals that have gripped American businesses were not yet a cloud on the horizon. Since then, dot-coms have folded at a vertiginous rate.
Case’s departure will also occasion another reevaluation of synergy and convergence. (Remember how articles in Talk magazine were going to become instant movies made by Disney and Miramax, later to be touted on ABC shows? For that matter, remember Talk magazine?) But it’s worthwhile to note that with Case gone, the only two men within the AOL-Time Warner power structure who actually created a company–Case and Ted Turner–have been pushed to the sidelines.
For now, though, the future looks brighter just by virtue of Case’s absence. “Everyone in New York is walking about with a bit of relief,” one AOL Time Warner executive said on the condition he not be named. “It’s quite different than if Murdoch had left News Corp. or Eisner had left Disney. We’re not very surprised. On the other hand, in Dulles [where AOL has it headquarters], they are quite upset. They’re wondering who else from the old guard will leave. Does this mean their business model doesn’t work? It’s a difficult time.”
“At the end of the day, this is a reminder that the media is still a business,” Husni said. “In 1999 and 2000, we stopped treating it like a business and began chasing the unicorn. If you look at the numbers from those years, it’s really more a cancerous growth than a normal growth. You need a model that’s going to make actual money. And magazines still have that. We haven’t found if the Internet really does.”
In another sign of internal turmoil at the media giant, Walter Isaacson, the former Managing Editor of Time Magazine, stepped down as CNN chairman to join the Aspen Institute, a non-profit global think tank.
