Long Live Chairman Levin
A 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.
They were called Chairmen.
If 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.
I 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."
Chairman 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.
I 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.
The 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.
There 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?
Levin 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.
The 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.'"
"Sure, 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.'"
And 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.
Thinking "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.
Levin's 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.
His understated conclusion: "No one is on [Time Warner's] playing field yet."
And 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, EBITDA 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 bigger tomorrow.
One 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."
In 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.
Chairman 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.
What 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?
Next 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.
Salon's 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 millennia.
Just 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?
Danny Schechter produced 10 documentaries with Globalvision, where he serves as vice president and executive producer. He is the executive editor of MediaChannel.org 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.