Headed by CEO Bob Pittman, top America Online executives were in Atlanta this week to spin Ted Turner back in favor of their planned merger with Time Warner.
Pittman tried to reassure Atlantans that there will be no layoffs after the merger; that Turner will still run the Braves, and that he’ll still have influence over the combined companies.
Save this column for a year, because I’m about to make a prediction. Pittman was lying.
We all know that politicians lie, and we all know why. They need to tell us what we want to hear so they can get past the next election or the current crisis. They really can’t be all things to all people, and they just have to fool slightly over half the people once in a while. Straight talk, on the other hand, is bound to antagonize those you disagree with, which is why it doesn’t win.
Corporate executives have to act like politicians to get through a proxy fight, or to win allies for a corporate makeover. Only after the deal is done do the knives come out. Entrepreneurs, on the other hand, have a firm grasp of power (it’s called equity) and can say what they want.
Entrepreneur Ted Turner sold his company years ago to Time Warner. Ever since then, it’s been poorly run out of New York. CNN.com is routinely hammered by MSNBC in the net ratings, while CNNfn flails far behind CNBC, and CNNsi is a gnat next to ESPN.
Under Rick Kaplan, formerly of ABC, the main network is all celebrity at the expense of real news, and (living in Atlanta I know this) morale is in the toilet. Everything is squeezed for profit, not growth, by suits in New York obsessed with their own little power games. The Braves are still good, but that’s a bone they throw so we won’t notice the real game.
Why should this change? The next few years will be a fight between Virginia and New York for control of this vast empire. And as long as the whole makes its numbers, no one else is going to care. In the fight to make the number, moreover, nothing can or will be sacred – not the Braves, and certainly not Atlanta. Moreover, Turner’s stake in the whole gets cut in half (he’s no longer the largest shareholder), so the need to throw him an occasional bone is eliminated.
Why should Bob Pittman listen to someone like CNN.com’s Scott Woelfel? AOL needs CNN’s content exclusive to keep its audience paying. The web executives on the Warner side have already gotten the message and jumped ship – the online business will unquestionably be run out of Virginia.
When this merger was announced, I called it stupid, and according to this chart investors seem to agree with me. AOL is down nearly 40 percent since the merger was announced, despite every attempt by management to talk it up. That 20 percent improvement in Time Warner’s stock value is the last bone Ted Turner and Atlanta will ever see, and they had better enjoy it.