Stealing Time

Abstract: The book "Stealing Time" describes the growth of America Online and the events leading up to, and immediately following, its merger with Time Warner. The personalities involved are also covered, and as in many other corporate fiascos, they are fascinating, if more than a trifle repellent.

 

About the Author: Alec Klein is an investigative business reporter for The Washington Post who covered AOL Time Warner for more than two years. He previously reported for the Virginian-Pilot (Norfolk), the Baltimore Sun, and The Wall Street journal. A Phi Beta Kappa graduate of Brown University, he is also a playwright.

In September 2003, the board of AOL-Time Warner decided to drop "AOL" from the company's name. At the same time, the company went back to its old stock symbol "TWX", dropping the "AOL" symbol it had adopted after its merger with America Online. While these moves were seen to be more symbolic than substantive, many analysts believed that by removing the overt associations with the AOL name, the company was trying to bring to a close a disastrous chapter in its history. A statement by the CEO, Richard Parsons, seemed to confirm this view. He said, "We believe that our new name better reflects the portfolio of our valuable businesses and ends any confusion between our corporate name and the America Online brand name for our investors, partners and the public."1 The book "Stealing Time" describes the growth of America Online and the events leading up to, and immediately following, its merger with Time Warner. The personalities involved are also covered, and as in many other corporate fiascos, they are fascinating, if more than a trifle repellent. The title of the book too is apt - between the day the deal was struck and the time when the decision to drop the AOL tag was taken, the company's stock lost twothirds of its value.

The deal was a steal, at least for the shareholders of America Online. The merger was completed after the dotcom boom began to fade, and if America Online had continued to remain a single entity, its shares would in all likelihood have dropped significantly in value, as did the shares of the other stars of the dotcom days.

The book begins with the genesis of America Online. Contrary to popular belief, Steve Case was not the founder of AOL. The company began life as Control Video Corporation, with an initial capital of $400,000, founded by Bill von Meister and George Middlemas, a venture capitalist from Citicorp Bank in New York. Von Meister had designed a small modem that allowed the Atari 2600 game console to connect to a telephone line, and allowed the machine to receive digitally transmitted video games. Control Video Corporation was set up to sell the modems and the service.

Bill von Meister, described as an "idiot savant" by a Washington Post reporter, was a colorful character who can legitimately be considered one of the unrecognized visionaries of the technology era. He was also a serial entrepreneur, launching a number of business ventures based on his ideas. As many of these ideas were much ahead of their time, most of his ventures flopped. However, enough of them were successful to allow him to indulge in his taste for wine, women and fast cars, and to find backers for the new projects he kept coming up with. Von Meister also had a reputation for spending his backers' money, on schemes that made little business sense.

Steve Case joined Control Video through the good offices of his brother Dan Case, a successful investment banker with Hambrecht & Quist, which was helping to finance the company. Case, at the time, was President of The Marketing Group, a consulting business he had set up with a friend.

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1] "Time Warner drops AOL name" Chris Isidore, CNN/Money, September 18, 2003.