Fools Rush in

by Munk, Nina

• ISBN13: 9780060540357
• ISBN10: 0060540354
• Edition: Reprint
• Format: Paperback
• Copyright: 2005-01-12
• Publisher: HarperCollins Publications

Summary

Every era has its merger; every era has its story. For the New Media age it was an even bigger disaster: the AOL-Time Warner deal. At the time AOL and Time Warner were considered a matchless combination of old media content and new media distribution. But very soon after the deal was announced things started to go bad - and then from bad to worse. Less than four years after the deal was announced, every significant figure in the deal -save the politically astute Richard Parsons - has left the company, along with scores of others. Nearly a $100 billion was written off and a stock that once traded at $100 now trades near $10. What happened? Where did it all go wrong? In this deeply sourced and deftly written book, Nina Munk gives us a window into the minds of two of the oddest men to ever run billion-dollar empires. Steve Case, the boy wonder who built AOL one free floppy disk at a time, was searching for a way out of the New Economy. Meanwhile Jerry Levin, who'd made his reputation as a visionary when he put HBO on satellite distribution, was searching for a monumental deal. These two men, more interested in their place in history than their personal fortunes, each thought they were out-smarting the other.

Table of Contents

Note to Readers

Prologue

"Resident Genius": From Time Inc. to Time Warner, 1923-1998

Enter the Internet Cowboys: AOL, 1985-1999

The Big Deal: AOL and Time Warner, 1999-2000

"Surviving is Winning": AOL Time Warner, 2000-2003

Epilogue

Notes and Sources

Acknowledgments

Index

Table of Contents provided by Blackwell. All Rights Reserved.

Excerpts

Fools Rush In
Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner

Chapter One

By all accounts, Henry Robinson Luce was endowed with moral certainty at birth. Born in 1898 to American missionaries inTengchow, China, Harry, as he was known, was a precocious andserious-minded child. At the age of five, as a diversion, he deliveredreligious sermons to his playmates. Later, turning to journalism,which he referred to as a "calling," he wrote: "I believe that I can be ofgreatest service in journalistic work and can by that way come nearestto the heart of the world." His father had devoted his life to proselytizing;likewise, Harry Luce would set people on the highway totruth. Making money was not his goal, as the terms of Luce's willwould later make clear: "Time Incorporated is now, and is expected tocontinue to be, principally a journalistic enterprise and, as such, an enterpriseoperated in the public interest as well as in the interest of itsstockholders."

When he was fifteen Luce arrived in America to attendHotchkiss School. From there he went on to Yale. He was an exceptionallygifted student: he wrote poetry; he became assistant managingeditor of the Yale Daily News; he graduated summa cum laude; hewas admitted to Phi Beta Kappa; and he was voted "Most Brilliant" inhis class. Harry Luce was most likely to succeed.

In the early 1920s, while he was working as a reporter at the Baltimore News, Luce, together with a former classmate from Yale,Briton Hadden, decided to start a weekly magazine called Time. Asummary of the world's most important news, it would run articles ofno more than four hundred words, or seven inches of type; it wouldalso deal "briefly with EVERY HAPPENING OF IMPORTANCE,"as Luce and Hadden explained in their prospectus. Unlike the LiteraryDigest, an existing summary of the news, Time would have aclearly defined point of view: "The Digest, in giving both sides of aquestion, gives little or no hint as to which side it considers to be right.Time gives both sides, but clearly indicates which side it believes tohave the stronger position."

In early 1923, having raised $85,675 from seventy-two investors,Luce and Hadden published their first issue of Time. Only twenty-eightpages long, the entire issue of volume 1, number 1, dated March3, 1923, could be swallowed and digested in thirty minutes or less. "Itwas of course not for people who really wanted to be informed,"sniffed W. A. Swanberg in his definitive 1972 biography of Luce. "Itwas for people willing to spend a half-hour to avoid being entirely un-informed."

Those who worked for Time were rewrite men whose job was toshrink and condense articles from The New York Times and New YorkWorld, transforming them into "Timestyle," the quirky prose forwhich Time became famous (or infamous). Together the men inventedneologisms -- telescoped words like "socialite," "cinemaddict,"and "guesstimate," for example. They also revived arcane termssuch as "tycoon" (Japanese for "great ruler") and "pundit" (Hindifor "learned man"). Deeply in love with adjectival phrases ("ToSwanscott came a lank, stern Senator, grey-haired, level-browed"),Luce and Hadden claimed they'd been influenced by Homer's Iliadwith its inverted syntax and double-barreled epithets ("white-armedHera" and "grey-eyed Athena" and "horse-breaking Trojans").

Time was pilloried by intellectuals. Parodying Timestyle for a1936 profile in The New Yorker, Wolcott Gibbs wrote: "Backwards ran sentences until reeled the mind ... Where it will all end, knowsGod!"

In 1929, just as Time was becoming successful, Hadden died of astreptococcus infection, and Luce took over, borrowing money to buyHadden's share of their company. He was thirty-one years old. Beforelong, Hadden would be a footnote in the history of Time Inc.

With a circulation approaching three hundred thousand, Timewas now sufficiently profitable that Luce could afford to expand. Determinedto spread his "fantastic faith in the industrial and commercialfuture of this country," Luce launched Fortune in 1930. Six yearslater, in late 1936, he introduced his most spectacular success, Lifemagazine. Its purpose: "To see life; to see the world; to eyewitnessgreat events; to watch the faces of the poor and the gestures of theproud."

Within hours of its arrival at newsstands, Life was sold out allover the country. Struggling to find enough coated paper to meet thedemand, Luce couldn't publish enough copies. Even he had neverimagined Life would be so popular. After just four weeks, Life's circulationwas 533,000; no magazine in American history had passed thehalf-million mark so quickly.

Sports Illustrated would come next. In contrast with Life, however,Sports Illustrated was not an immediate success. Launched in1954, when spectator sports were looked down on as fodder for theworking classes, Sports Illustrated was ahead of its time. But Luce wasfully committed to his new magazine. Before long Sports Illustratedwould broaden the appeal of spectator sports and change the way theywere covered.

Long before Sports Illustrated had become profitable -- even before it was launched -- Luce had become a media baron. By theearly 1940s, one in every five Americans was reading a Luce publication. Company revenues were $45 million. Emboldened by the successof his publications, Luce increasingly turned them into vehicles ofpolitical and moral propaganda. Money had never motivated Luce,but power did.

In 1941, decrying isolationism, Luce argued that it was time forAmerica, the world's most powerful nation, to fulfill its duty to humanity.The twentieth century, he stated famously in an editorialwritten for Life, was "the American Century." Americans had to "acceptwholeheartedly our duty and our opportunity as the most powerfuland vital nation in the world and in consequence to exert upon theworld the full impact of our influence, for such purposes as we see fitand by such means as we see fit."

Fools Rush In
Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner. Copyright © by Nina Munk. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.

---

Excerpted from Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner by Nina Munk
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.