Jerry Levin-- Another Fake Apology

A few days ago, January 4, there was a marking of the 10th anniversary of the TimeWarner merger with AOL. I ran a division of the company at the time, Reprise Records, and I've written about the merger and the aftermath several times here at DWT. When I was president of Reprise, my boss was the chairman of Warner Bros Records. His boss was the chairman of the Warner Music Group and his boss was Jerry Levin. The times I interacted with Levin were pleasant enough. As you can see from the Squawk Box video below, he's a thoughtful, sensitive guy. He was easily suckered by predatory huckster Steve Case. I was only in one meeting with Case and one would have had to be deaf and dumb to miss what he was all about; I walked out of the meeting, aghast, and told my boss I was leaving the company. He said he was too and asked me to stick it out with him for a few more months. Last week, on the 10th anniversary of the merger that is widely considered the worst business deal in contemporary history, it was Levin, with the vicious predator sitting and watching passively, who stepped up to the plate and took some kind of phony responsibility and made the lamest apology for the lamest merger imaginable.

"I was the CEO; I was in charge. I'm really very sorry about the pain and suffering and loss that were caused. I take responsibility," he said. "It wasn't the Board [that isn't true]; it wasn't my colleagues at TimeWarner [also untrue]; it wasn't the bankers and lawyers-- there were a lot of them-- [sure, sure]; it was not Steve Case, who was a brilliant, young digital entrepreneur. It was just taking this magnificent concept and not being able to meld it into..." blah, blah, blah.

He's still sold on all the bullshit about Case. This "brilliant young digital entrepreneur" had a "magnificent concept" all right-- and it worked exactly how it was meant to work. Billions of shareholder dollars and corporate value went directly into Case's and his cronies' pockets (including into Levin's). His apology would be more meaningful if it meant something substantive-- like... oh, I don't know... say $50 million donated to a public trust for the shareholders who were fleeced and the employees whose careers and lives were ruined. Instead he said he hopes "business schools will teach values." Too late, that, for these two self-proclaimed Giants of Industry.

Yesterday's review of this farce by Jeffrey Sonnenfeld in the NY Times was as full of shit-- at least in terms of Levin-- as the apologia itself.

[T]his first business day of the new decade opened with a confession and apology that was quite different from the standard choreographed fare of a celebrity cornered over sexual misconduct or a rogue chief executive who plundered shareholder wealth. Instead, this acknowledgment of failure was from a respected business leader [says who?] who stepped back into the public spotlight to voluntarily assume responsibility for bad professional judgment.

You want to know what that merger and these players were really all about? Read Nina Monk's book, Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner. Levin was a naive sucker and Case was a crook and thug.



UPDATE: One Third Of All AOL Employees Being Fired

I guess Levin's apology was a preemptive strike.

Tim Geithner Worked Out Just Fine For Me... Today

I know I wasn't a typical corporate executive. As president of Reprise Records, a division of TimeWarner and, horribly, AOLTimeWarner for a brief but fatal moment in time, I had access to one of the company's corporate jets. They're very comfy and convenient, especially for international travel. I sometimes flew with other CEOs and chairmen and presidents on them. But they cost tens of thousands of dollars to operate on flights across country so I asked to use one exactly zero times. Never, not once. Just contemplating the idea made me nauseous. All that money that could be used for so many more worthwhile things... and what a colossal rip-off of the shareholders!

And rip-offs like that are small potatoes. Nina Munk's definitive book on the AOL TimeWarner merger, Fools Rush In-- Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner, exposes what a real full blooded rip off is all about.

On Monday, January 10, 2000, America Online announced that it was buying Time Warner for $163 billion. The news was crazy, incredible. The biggest merger ever, it was, according to the media, an "awesome megadeal" and "a fusion of guts and glory. It was "the deal of the century" and a "mega-marriage of earth and cyberspace." An internet upstart, AOL, was buying the world's most powerful media and entertainment company. "A company that isn't old enough to buy beer," marveled the Wall Street Journal, "has, essentially swallowed an ancien regime media conglomerate that took most of a century to construct.

Two years later, after the smoke had cleared, $200 billion of shareholder value had vanished into cyberspace. One the trail of a possible fraud, the SEC and the Justice Department started investigating AOL Time Warner's accounting practices. Meanwhile, a civil war had broken out inside the company, complete with backstabbing and personal betrayals. Before long, every major player was out of the company, discredited, and humiliated. Jerry Levin, Time Warner's "resident genius," lost his job, lost his reputation, and, in the view of some people, simply "lost it." Steve Case, the visionary leader of AOL, for forced out of the company he had created.

Neither went to prison. No one did. And that "$200 billion of shareholder value [that] had vanished into cyberspace?" Oh, that. Well, estimates when all is said and done, are that Case and his cronies only looted a mere $6 billion for themselves. And what's $6 billion or so between oligarchs?-- not much compared to the Enron Scandal and the other too numerous to remember corporate hallmarks of the Bush Regime...

But from time to time I get a letter from some court or other telling me that another piece of one of the class action suits I'm involved in against Time Warner has borne some fruit. One of those letters came a few days ago.

In 2003, a class action lawsuit under the Employee Retirement Income Security Act (ERISA) was brought against Time Warner on behalf of certain Time Warner Savings Plan participants who held units in the Company stock fund in their 401(k) account. Time Warner reached a settlement to resolve this matter and, as a result, you will soon receive s pro-rata share of the settlement.

Specifically, Friday morning at 3AM. I had a feeling this wasn't the lawsuit that was addressing my loss of $10,000,000 (give or take) in now worthless stock options. I can't say I really understood what this one was about but I spent a couple of hours on the phone Wednesday and Thursday trying to find out from the program administrator, Fidelity. No luck. But I did find out that on Friday at around 3AM (in some time zone) they would deposit an undisclosed amount into my Fidelity account.

It dawned on me that the stock market has been crashing by hundreds of points per day-- down around 50% since Bush first stole the White House-- and that I needed to know what Fidelity account they would be dumping the undisclosed sum into. More hours of frustrating time on the phone with Fidelity. Finally someone, apparently in the hope of getting me out of her hair, agreed to change the designation for the incoming funds from "Growth Fund" (something that could easily lose 5-10% of it's value on the day it was deposited) to a cash account.

It felt like Christmas without the tree when I tiptoed downstairs this morning at around 5:30AM and called Fidelity to see what had happened. The settlement, or my part in it, was ok-- more than enough to pay for my trip to Mali, not enough to buy Roland his new house-- but I flipped out when they told me it had been deposited in "Growth Fund." And there was nothing they could do about it until the 4PM close of the trading day. That meant my money would rise or fall with the market today.

I long ago stopped following the market. I couldn't tell you where CNBC is on the dial if my life depended on it. But I heard the Asian markets had rebounded from yesterday's mayhem and it was expected that the U.S. markets would follow suit. When I left the house to do some chores, the market had gone up a little, down a little and was holding steady (in the toilet) and I was still hoping Hillary would become Senate Majority Leader, Wes Clark Secretary of State, Bill Richardson Secretary of Commerce and Anybody-But-Larry Summers Secretary of the Treasury. The phone rings; it's my financial advisor-- who knows nothing about the Time Warner drama-- and he says the market is exploding. "Why?" The Market is ecstatic about Hillary, Richardson and Geithner. "Hillary?" So that's when I found out that she's going to be Secretary of State after all, and that Richardson will be Commerce Secretary and Tim Geithner, not Larry Summers, was going to Treasury. Summers will work in the White House, giving Obama bad advise, which he can take or not. Conventional wisdom is that Geithner was the best choice of everyone Obama was said to be considering.

The market closed up 494 points-- about what it lost on Thursday-- but I cleaned up on my one day "investment," which is now safely in a money market-- at least until Obama names the rest of his economic team.