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Wheres steve case { July 19 2002 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2002/07/19/business/19CASE.html?ex=1027742400&en=1b33e84cca6c0ab9&ei=5006&partner=ALTAVISTAhttp://www.nytimes.com/2002/07/19/business/19CASE.html?ex=1027742400&en=1b33e84cca6c0ab9&ei=5006&partner=ALTAVISTA
July 19, 2002
Pressure Builds on Case to Take the Lead
By GERALDINE FABRIKANT
Meanwhile, where is Steve Case?
For much of the last year, as AOL Time Warner's problems have mounted and its stock has crashed, Stephen M. Case, the company's chairman, has been all but invisible. The official explanation has tended to be that Mr. Case, 43, was caring for his older brother, Daniel H. Case III, the former chairman of the investment firm J. P. Morgan H&Q, who died of brain cancer last month.
But the company's critics say that Mr. Case, the founder of America Online, has played too passive a role at the company ever since he persuaded Time Warner to trade its media assets for AOL's Internet-inflated stock in the companies' merger deal back in January 2000. And now, they say, it is time for Mr. Case to involve himself in the company's manifold problems, which include anemic growth in the online business.
Asked about his seeming hands-off role, Mr. Case said yesterday in a telephone interview, "I have gotten more active in the past six months, meeting with different folks and suggesting a variety of things such as revitalizing AOL." But he said he saw his primary role as providing a "sounding board" for the company's recently promoted chief executive, Richard D. Parsons. "I'm the chairman, not the C.E.O.," Mr. Case said.
At least some financial analysts, though, would like to see Mr. Case become much more engaged. "I guess he has been someplace, but you would like to see him out there in a leadership role," said Tom Wolzien, a media analyst at Sanford C. Bernstein & Company. "With all AOL's problems, this is a time for leaders."
The question is whether Mr. Case has any power with which to lead, even if he chooses to. America Online, with its lofty stock and Internet buzz may have seemed to hold the upper hand 19 months ago. But by now it is the former Time Warner people who seem to be in charge.
Yesterday, when Mr. Case's former America Online president, Robert W. Pittman, resigned under pressure as AOL Time Warner's chief operating officer, Mr. Case did not take part in a conference call with reporters. Representing the company, instead, were three executives from the former Time Warner: Mr. Parsons; Jeff Bewkes, who had been chairman of the HBO cable network and was promoted yesterday to a post overseeing all the company's entertainment and network businesses; and Don Logan, who was elevated from chairman of Time Inc. to run a newly created media and communications group that includes the magazines, AOL and the cable television systems.
Michael J. Fuchs, a former Time Warner executive before the AOL merger, wonders why the board has been so undemanding of Mr. Case, while apparently assigning much of the blame to his chief lieutenant, Mr. Pittman. Gerald M. Levin, the chief executive who gave way to Mr. Parsons in May, had resigned amid speculation that the board was dissatisfied with his performance.
"As you peel all these people off, " Mr. Fuchs said, "the question eventually is where does the buck stop. What is Mr. Case's responsibility?"
"If you are a board member, you say to Case: `What is this shrinking asset worth?' " Mr. Fuchs said. "This company did not lose 70 percent of its market capitalization because of the declining value of Time Warner. Isn't this Case's responsibility, and what is he doing about it? The question is whether he has any view to solving AOL's problems."
But few media industry analysts or executives expect AOL Time Warner's board to take Mr. Case to task. After all, he built America Online into the company that Time Warner considered merger-worthy, and he came away from that deal as the second-largest individual shareholder of AOL Time Warner after Ted Turner. Mr. Case owns 11.4 million shares, compared with Mr. Turner's 148.3 million, according to the company's latest proxy statement.
And there are people on the current AOL Time Warner board who were directors at America Online and who are seen as likely Case loyalists, including Daniel Francis Akerson, chairman of XO Communications; Frank J. Caufield, a general partner at Kleiner Perkins Caufield & Byers; James L. Barksdale, co-founder of Technet; Miles R. Gilburne, managing director of ZG Ventures; and Kenneth J. Novack, vice chairman of AOL Time Warner.
For that matter, Mr. Parsons, the chief executive for less than two months, has yet to prove himself as the day-to-day leader of the company. While he is well liked, he faces a monumental task in trying to solve the company's problems and restore its credibility.
In an interview yesterday, Mr. Parsons would say little about Mr. Case other than, "He is the chairman of the board and is working to give me wisdom and guidance."
But the specifics of that wisdom and guidance remain rather elusive. In a recent company newsletter, Mr. Case extolled concepts of media convergence that seemed highly theoretical and years off, including multimedia connections to cellphones and other wireless devices.
Yesterday, Mr. Case acknowledged that the AOL online service had more immediate challenges. "During the Internet boom, we took our eye off the consumer a bit because we were focusing on commerce and advertising," Mr. Case said. "Now we are focusing on communications: how do you rebuild the service? How do you build on the concept that membership has its privileges."
A priority for AOL, Mr. Case said, is developing a high-speed, or broadband, Internet service attractive to AOL's tens of millions of subscribers. "We have not yet created a broadband service that people can't live without," Mr. Case said.
Broadband — a high-capacity digital pipeline into American homes that would carry the Internet, cable television and a multitude of still-to-be-invented revenue-generating entertainment and information services — was a defining concept in the merger of America Online and Time Warner.
But these days, people at the company are more fixated on the fact that the AOL online unit is by most criteria the weakest part of the corporation's business. Mr. Logan, the executive who will now oversee that unit as part of his new portfolio, is said to have been one of the former Time Warner executives who have resisted efforts to force "synergies" between the online business and the entertainment assets.
The other newly elevated executive, Mr. Bewkes, was said by one of his friends, meanwhile, to have opposed the merger of AOL and Time Warner, once Time Warner's stock started falling in 2000 after the deal was announced. Mr. Bewkes denied that characterization yesterday.
In any case, as Mr. Case defines his role as the America Online holdover and chairman of a company that seems less and less AOL and more and more Time Warner, it is Mr. Bewkes and Mr. Logan who will be conducting much of the day-to-day business.
"They are trying to encourage cross-divisional collaboration and to drive innovation," Mr. Case said, trying to keep the vision alive.
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