Bigger than both of us

Time Warner and AOL shareholders bless the marriage. But will Europe and the U.S. government throw rice?

By Sean Elder

Jun 24, 2000 | Everyone's trying to get their arms around the significance of this," said Gerald Levin, CEO of Time Warner. He was addressing a crowd of several hundred Time Warner shareholders at a "special" meeting at the company's headquarters in New York Friday, and the "this" he was referring to was Time Warner's pending merger with AOL.

In January, when Levin and AOL CEO Steve Case announced the proposed merger in the same building, everyone was trying to get their arms around each other. Levin hugged Case, Time Warner's Ted Turner hugged AOL's Bob Pittman and Time Warner's Richard Parsons hugged everybody. It was a love feast the likes of which had not been seen since the Human Be-In, and there were no hard questions, just full-body embraces. (Levin and Parsons, still feeling the afterglow, came to Friday's merger meeting without their ties.)

Since then, however, a few snipers have taken aim at the union. Aside from the complaints filed with the feds by various consumer advocacy groups and rival media corporations such as Disney, the merger has been getting some hard looks from the European Union. It was they -- said Levin in response to a shareholder's question -- who were trying to get their arms around the meaning of the merger by launching a full-scale investigation of its implications. (Of particular concern to the EU is the new company's dominance of "the digital delivery of music via the Internet.")

And AOL shareholders, who have seen their stock plummet 30 percent since January, were peppering Case and company with many of the same questions at a meeting in Vienna, Va., at roughly the same time. (The two meetings were supposed to happen simultaneously, but AOL's began about 45 minutes late. They probably had to download some ads first.)

In fact, AOL has been awash in bad press lately. First there was the company's acknowledgement that hackers had recently invaded the service and stolen member information, including passwords and even credit card information. Then there was the FCC's disclosure that it was looking at AOL's unwillingness to allow other ISPs access to its instant-messaging service. Not to mention a little $3.5 million fine the company just shelled out to the Securities Exchange Commission for violating federal regulations in reporting its income in the '90s.

All of which compelled AOL to hire a team of telemarketers in New Jersey to call shareholders and encourage them to vote for the merger, literally to get out the vote: Unreturned ballots were counted as a no.

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