Steve Case's Last Stand

With the departures of AOL Time Warner C.E.O. Gerald Levin and C.O.O. Robert Pittman, all the anger and hostility consuming the world's most powerful media company is focused on chairman Steve Case. Employees from the Time Warner side blame him for crippling their company (and destroying their retirement accounts). Top investors, including Ted Turner and Gordon Crawford, are calling for his head. His management style, his accounting practices, and his vision are under attack. How come he's still there? NINA MUNK goes into the trenches Vanity Fair, January 2003

Grant Steve Case this: he may be a genius. One after another, people who have worked with Case say
he's "really smart." They say they're awed by the way he handles information, by his ability to absorb, process, and sort huge amounts of complex data, and, finally, translate it all into a stripped-down concept anyone can grasp. What else do people say about the 44-year-old chairman of AOL Time Warner-as a person? A senior company executive who has known Case for many years confided to me, "He spends a lot of time with his kids. He's very devoted to his family." Anything else? "He goes to his daughter's soccer games." Another longtime colleague, who considers himself a friend of Case's, confirmed this: "He does make sure he's at his kids' soccer games.... He's an extraordinarily strong family person-a devoted family person." When pressed, a former senior AOL executive, someone who has worked closely with Case since the mid-1990s, listed Case's personal interests for me: "He travels with his wife in the summer." Does he collect anything? Is he interested in politics? Does he speak foreign languages? (My line of questioning was growing desperate, as anyone can recognize.) "He likes good wine, I know that." A pause; then, as if he were overwhelmed by the impossible burden of humanizing Steve Case, the colleague concluded, "I don't know if he reads, I don't know if he goes to the movies, I don't know if he plays ball, I don't know if he's a sportsman. I don't have any idea. None. None." We do know this: Case is aloof. He doesn't like making small talk. He's uncomfortable at parties, often appearing bewildered, as if he doesn't get the point of being there. In photo after photo, he looks past the camera with the same forced and frozen smile. "He doesn't create a warm and fuzzy," yet another AOL executive told me. He added, "One of the longest six hours I ever experienced was sitting next to him on a plane going across the country." n the context of the ongoing battles at AOL Time Warner, Case's aloofness may turn out to be his fatal flaw. Having alienated one colleague after another, he is fighting to hold on to his position atop the world's most powerful media-and-entertainment conglomerate. In the three years since Case (then running AOL) and Jerry Levin (then C.E.O. of Time Warner) shook hands on the deal that created AOL Time Warner, Case has made few new friends or allies. In fact, many people on the Time Warner side of the company are hostile-they want Case out, now, as if his departure would magically solve the company's problems. Summing up the free-floating resentment of her colleagues, a Time Warner executive told me, "I don't see how he can survive-there's so much ill will towards him." That ill will is not restricted to headquarters. Many of AOL Time Warner's biggest investors, most notably Ted Turner (whose more than 3 percent stake in the company makes him its largest individual shareholder), are convinced that the company would be better off without Case. "To me, it's a huge negative having Steve as the chairman of the company," another important AOL Time Warner shareholder told me. Determined to stay put, Case has in recent months made himself visible at AOL Time Warner after a long period in which he had largely withdrawn from the company's day-to-day affairs; of late, he's been more available, outgoing, sometimes even accommodating. As co-chair with C.E.O. Dick Parsons of the board of directors' strategy committee, Case has been meeting with the various divisions and their leaders to figure out what the deeply troubled company should be doing. In February he attended Warner Music's Grammy Awards party, mingling awkwardly with Kid Rock, Linkin Park, and Matchbox Twenty at the Mondrian Hotel in West Hollywood. In September, at a party hosted by AOL Time Warner's HBO division, Case posed for photos with actor Tom Hanks. In October, onstage at New York's Avery Fisher Hall for the launch of AOL's version 8.0 software, Case labored to trade jokes and banter with comedian Dana Carvey. (In a rare moment of spontaneity, he was even seen making rabbit ears behind Ted Turner's head.) That same month,

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For AOL shareholders. One by one. In those days. Case was held in awe. Time Warner's fractious division heads have long interpreted any direction from headquarters as a hostile invasion. On the contrary. was worth more than General Motors and the Ford Motor Company combined.changing hats. "If AOL is your religion. day after day. "Here's the guy who conceived the deal. "Steve understands and shares the frustration that other major shareholders have about the performance of the company since the merger. their stock options made worthless. And that's what I plan to do. a constant reminder that they were taken. (He also has nearly four million unvested options that are worthless at the stock's current price. the Time Warner deal was a miracle: without it. thinking big thoughts. rubbing salt in their wounds. and lost out big. he liked playing an elder statesman: making informed speeches about the digital revolution. But as time went by and the heady promises of the great AOL Time Warner deal faded-and with Case now being criticized for remaining aloof from the fraythe AOL side slowly lost control." explained a longtime AOL executive. Case wasn't expected to spend his lunch hour justifying his paycheck to this one and that one. a member of the AOL Time Warner board." Compared with the true believers at AOL. he was still being hailed as a prophet. people at Time Warner are cynics." Above all. an admission of having falsely inflated revenue by $190 million (so far).) B The movement to get rid of Steve Case isn't about just money lost and retirement accounts and stock options.E. they're mostly of one mind. before AOL bought up Time Warner. those are the sorts of figures his detractors throw out when they're sounding off about the evils of Steve Case. hanging around headquarters. to happen. "As chairman. according to calculations based on S. Case represents everything that's gone wrong with the company in the past two years: a stock price that's down 70 percent from its peak of $58." In retrospect. he gave a luncheon speech at a Goldman Sachs investor conference and announced to the audience. told me when we spoke in late October. Beyond that. the executives who'd initially played a role in bringing together . filings compiled for me by Thompson Financial. Besides. and then withdrawing to the sidelines as chairman.O.51 in May 2001. with the exception of Levin as C. in the decade since AOL went public. for example. however. According to people close to him. once described breathlessly as the company's "crown jewel. If the AOL deal had never happened. the company Case built in just 15 years. AOL. the most senior corporate positions at the new company were generally occupied by loyal AOLers. It's deeply personal.E. The people who lost out. and yet here he is.. When it comes to Steve Case. Case used AOL's then inflated stock to buy their company. was reluctant to be quoted by name. and. got this deal. Steve is your spiritual leader. a $54 billion (and counting) write-down taken last April to reflect the declining value of the company. were Time Warner's shareholders and employees. who didn't presume to expect that such an extraordinary man would make small talk and ask about their child's first day at school. the value of their retirement accounts has been destroyed. they've never worshiped their leaders. What's grating on Time Warner executives and investors is the collective belief that Case fleeced them. it's a religion.C. a visionary of the Internet Age. "To the people at AOL . it may be that Case's first mistake was handing over the title of C. AOL is not just a company." ack in the heady days of the late 90s." Kenneth Novack.E. a federal investigation into the company's accounting. Ted Turner. Case continues to hold another $170 million worth of AOL Time Warner stock-plus another $130 million of old AOL options vested but not yet exercised. brought in the guys who were his culture. Wall Street revered him: at its peak in late 1999. and roll up my sleeves and be helpful. in the fiscal quarter that ended in September. what Time Warner executives and investors resent is this: with a remarkable sense of timing. my role is to run the board. pitched the deal to Jerry [Levin]. like most people I spoke to for this article. his accounting. has seen the value of his shares drop from roughly $8 billion to $2 billion. and one of Case's closest confidants. an AOL Time Warner vice-chairman. this catastrophic deal. to Jerry Levin. tending to his charitable foundation. their stock might now be worth $47. who. Despite his shortcomings as a manager. As one of AOL Time Warner's biggest shareholders told me.O.. To these people. As for Time Warner employees. That sleight of hand took place in January 2000. his company-it's just a big downer for everybody. they'd be holding shares worth less than half AOL Time Warner's current $15 stock price. partner with Dick Parsons. just before the Time Warner deal was announced. even loved (one hazards) by his employees.. Does he really? Can he possibly? After all. according to numbers recently crunched by Newsweek columnist Allan Sloan. just two months before the meltdown of Internet stocks. a 30 percent drop in cash flow generated by the AOL division. Case has exercised and sold about $700 million worth of AOL stock options.

Drawing out the surfing metaphor. is to play devil's advocate: an executive proposes an idea. they may look like setbacks. AOL was on the way out. using high-speed Internet connections. he continues to use such late-90s buzzwords as "convergence" and "interactivity" to describe his business model. Last July it was Bob Pittman's turn: the most senior AOL executive after Case." the executive who attended the meeting told me. cartoons. If the executive buckles under the pressure and recants. Something else ticks these people off: Case's refusal to admit defeat. others marginalized. Without irony. Levin himself was pushed out." explained an AOL executive who has worked with Case for more than a decade.E. During a strategy meeting. replaced as C. "If you say 'Yes' all the time to him. Case bluntly told Warner Bros. at the same time. Few people dispute Case's view of the digital future: as visions go. If Case survives the purges. "That belief of his burns inside of him like radioactive uranium. It's a mind game. this Darwinian style is an intellectual exercise. Case's belief in the future of AOL was unshakable. the thinking went. as recounted to me by someone who was present. The Internet's going to steal all your copyrighted material. or isn't being . will enough people get wired for or be willing to pay for high-speed Internet access?) That debate aside. Nonetheless. (For instance. has been untainted by its catastrophic aftermath). Instead of being admired for his steadfastness and determination. TV shows. by someone who. then has to prove that he truly backs the idea and believes in it. Steve has had this burn in his belly that what he was creating with AOL was not just something you did with your computer-like word processing. the current problems at AOL Time Warner are minor and temporary. used by Case to help him work through an idea and. "Darwinian management" is how one AOL executive described Case's style to me. According to several admiring AOL executives. people will then access AOL Time Warner's proprietary content in all sorts of unforeseen ways." explains another AOL executive. you have to tell him that he's wrong-if you think he's wrong-and you have to tell him exactly what you think. "If you are a peer. It was something huge and something that would one day be as big and pervasive as the telephone or the television. Pittman resigned as the company's chief operating officer when it became clear that his power base had eroded. Case has offended Time Warner executives on more than one occasion. or when it'll come. Leonsis concluded: you either ride the wave of the digital revolution or it drowns you. and magazines-will eventually be converted from analog to digital. AOL Time Warner must figure out how to make money in entirely new ways. by Dick Parsons (who. knew nothing about their business. movies. what repels Case's detractors within the company isn't the vision itself but the raw. to think creatively. Case is described as "stubborn" and "tone deaf" by people on the Time Warner side." There's only one problem with this approach: "If you didn't know him. it won't be the first time he's beaten the odds through sheer tenacity and resolve. others forced out. If competing Internet-service providers didn't finish it off. colleagues say." Indeed. it's become commonplace. the executive. aggressively. but really they're nothing more than the zigs and zags you'd expect when a sailboat is on course and tacking." Likewise. according to the media and Wall Street. but it's inevitable" is how Ted Leonsis. Throughout much of the 1990s. all creative content-music.O. It's ever present-it's the drive that propels him. In his view. executives: You guys will be out of business. and Case responds by arguing forcefully. "He thinks he's challenging people to do their best. "Since the early 1990s. they may be painful. despite having helped negotiate the AOL deal as Levin's second-in-command. the setbacks of the past three years have not changed Case's faith in the future of AOL Time Warner. In Case's view. But some people on the Time Warner side don't think it will arrive as quickly or universally as Case imagines. But it doesn't motivate people-it pisses them off. to survive. confrontational style of management he uses to get his points across-his lack of "warm and fuzzy. he'll stop working with you. Anyone who disagrees hasn't seen the light yet. he has lost the game. books. In December 2001. vice-chairman of the AOL division." The way Case typically makes decisions. in their opinion. You've got to be thickskinned to survive in his business world. logically. to test his managers' independence. who can't be sure just where Case stands on the issue.AOL and Time Warner lost power: some of them were fired. What are you going to do? The Warner executives apparently took umbrage: they were being second-guessed. In other words. you'd be insulted. surely Microsoft would. Case is now the last man standing-a target for the accumulated ill will of employees and investors unappeased by the previous bloodlettings. "This wave is going to crest-you don't know how high it'll be. against it. "He doesn't second-guess himself or have regrets" is how a senior AOLer describes Case's messianism. explained Case's view to me.

or hasn't weighed the facts. a distraught Steve Case . represented the state's powerful sugar and pineapple companies. Steve Case's mother. and wristwatches door-to-door. Restless after two years at P&G. as well as on his personal Web site and in his speeches. it was because his full-time campus occupation was to start and then promote one business venture after another. Case launched Williams Fruitbaskets.. To the extent that he does acknowledge that the AOL Time Warner deal has so far been a fiasco. that Case was granted his epiphany. "Remember: Courage through analysis. He would shoot for C's and he knew why he was shooting for C's." tephen McConnell Case was born in Honolulu on August 21. Despite his efforts. sold for $4. Then the guys running it screwed it up." said Lankford. while they were still teenagers. He knew that the game was not 'Get an A'. a student-run shuttle that transported students from Williams to the Albany airport at the end of each semester. Purple Cow Records. "Steve continues to believe in the potential of the merger. Case joined Procter & Gamble as an assistant brand manager. Although he grew up in the turbulent 60s and 70s. Kansas. smiling brightly. and signing up roommates as business partners. Described time and again. selling Christmas cards. "And he's determined not to let the noise-which is generated by a few people and then fed by the press-distract him or distract us.. Livingston Taylor. Case took control of Magic Bus. "He knew he was going to be a businessman from the moment he walked into Williams. Scott Lankford. From a haphazard operation. 1958. his childhood reflects the cozy clichŽs of a yellowing copy of Ladies' Home Journal. a corporate lawyer. They did this grand deal. established a company called Case Enterprises.'" If Case was not a dedicated student ("I would not want to reveal his grade." That isn't likely. Daniel Case Jr. estimated that total losses would probably approach five thousand dollars or more. and Southside Johnny and the Asbury Jukes that he was accused of "deliberate mismanagement" of funds by the school paper.. Magic Bus turned into an efficient one. he spent so much of the school's money hiring big-name acts such as Don McLean. the revelation that led to AOL. Steve and his older brother. the now mythic story goes like this: Case bought himself a Kaypro II personal computer and a primitive modem. in almost every in-depth interview Case has given. After one sparsely attended concert. or is myopic. Using his dorm room as an office.. He lost at least $350 on a for-profit Saturday Night Fever party he helped organize. the game was 'Take over the world. Case has portrayed himself as a victim of other people's incompetence. offering parents a way to send their children a healthy snack during exams. recalled. a lifetime ago in the history of computing. "but he was among my median students"). He also started a record label. seeds. "He had this vision. "Aloha from The Cases" is the message printed on a Christmas card from 1971.logical. He didn't care particularly about grades. was an elementary-school teacher who stayed at home to raise the children. featuring all four Case children. Case never made much money at Williams." Case preached in a recent Instant Message to his colleague Leonsis. "He was a yuppie before the word existed. the third of four children." That's how one major shareholder described the explanation Case gave him. Case joined Pizza Hut as a manager of new development." James MacGregor Burns. despite being described as a "personal . the first on-line service for consumers. Steve Case was not your typical upper-middle-class suburban boy. "Sprawled on a foam rubber cushion between sets. The Case children had paper routes and limeade stands. Carol. living by himself in a rental apartment in Wichita. The shareholder didn't swallow the story: "I would feel a lot better about it if Steve said that he made a bunch of mistakes. he then paid $100 to subscribe to the Source. Tuffy and Tabe." Ken Novack told me. along with their corgis. The year was 1982. a writer for the Williams Record reported. S It was during his time at Pizza Hut. Dan III. whose only known LP. he was too single-minded for that.. And as co-chairman of the All-College Entertainment Committee. necessitating the cancellation of Homecoming concert plans." After graduating from Williams in 1980 with a degree in political science. a Simon and Garfunkel-influenced compilation entitled The Best of Williams Volume One-1978. told me elegantly. professor emeritus of government at Williams. who roomed with Case for three years in the late 70s at Williams College.. (Case's Kaypro II weighed 26 pounds. His father.

He was a decorated veteran of the Vietnam War whose only business experience was running a string of successful bars in Washington. Case was named C.E. In late 1986 he packed a suitcase. nintimidated by the odds. Case was working 15-hour days. and moved into a rental apartment just down the road from Apple's headquarters in Cupertino. patiently. "The deals he did-there was no logical reason for them to be done." In 1991. After the deal was signed. and nothing would deter him-nothing. what Case made happen was a deal with Apple Computer. almost all of them ended up in a Dumpster behind Control Video's offices in Tysons Corner. and his colleagues became convinced that Case was superhuman: he walked on water and changed it into wine. He was 33. in Commodore. "It was intoxicating. He knew what was going to happen. One year later." Seriff. Still. Every day for three months. it became sort of religious. what is more. only one customer. Fueled by the belief that he was building something that would change the world. William Von Meister. One year later. Apple would do a deal with one of the bigger companies. Determined to salvage their investment. But inside the company (whose name was changed to America Online in 1991) it was clear that Case had become the leader. A few months later. Case had heard the prophetic call." recalled Seriff. using the core idea behind GameLine to launch Quantum Computer Services.. describing those early years to me. None of them should have happened. and in the view of its board of directors. introduced in 1985. A consummate inventor and entrepreneur. the home-video-game industry collapsed. and establishing a pattern that would become typical for him. "More and more." Rather than compete directly for consumers with the industry's big players (the Source." said Kimsey. got on a plane.. Kimsey was still the company's C. Steve was driven by a much longer-term vision. Virginia. it was "like grabbing a gumball out of the crocodile's mouth." and featured a nine-inch green phosphor screen.O. But he was an old and trusted friend of venture capitalist Frank Caufield. But Case was enthusiastic and bright and optimistic. although Kimsey knew almost nothing about computing. Kimsey started over.. which allowed subscribers to download video games onto their Atari 2600 home game machines. The company offered an on-line service for Commodore 64 computers called Q-Link. He didn't grandstand-he just went and made it happen." Seriff told me. AOL. he focused on only one thing: wearing down Apple's resistance.O. who left AOL in 1996.C. who joined the company in 1988.O. "How many people can say that they go to work and do something that nobody's ever done before? We were saying that every day. This was the beginning of what would become AOL.O. took orders for tens of thousands of units. Case was forced to give back the C. Von Meister and his chief technologist. "He had no credentials." said Randy Dean. concurred: "This is going to sound so corny. Of the 50. aged 25.E. as a marketing consultant. at a 1983 Consumer Electronics Show in Las Vegas. and Atari teetered on the edge of bankruptcy. who was working for the investment bank Hambrecht & Quist. At the 1983 electronics show. the company's backers pushed Von Meister out and installed Jim Kimsey as C. in the words of an AOLer who witnessed it. California. IBM.portable computer. U . rather.E.' . Case was too young to give the company the credibility needed for an initial public offering. Dan's firm-had invested in Control Video. the two men had been at West Point together." Most famously. title to Kimsey on practical grounds: AOL was getting ready to go public. inspiring his employees to do the same. "I was driven more by everybody telling me. and it did. With Marc Seriff in charge of technology and Steve Case responsible for marketing. his brother Dan-or. He was a pizza-marketing guy." Case is quoted as saying by Kara Swisher in her 1998 book. H&R Block's CompuServe. Kimsey told me. Case returned to Quantum as a conquering hero. common sense dictated that if Apple wanted such a service. then owned by Reader's Digest.) "When I finally logged in and found myself linked to people all over the country from this sorry little apartment in Wichita. poorly financed company with a shaky history and. Quantum was not just unknown. We were a nobody. but Steve is one of those destiny kind of guys. 'It can't be done. it was just exhilarating. one after another. one of Control Video's largest investors. D. Quantum started out by building proprietary on-line services for computer manufacturers.000 or so GameLine modules made. introduced Steve to the man who had created the Source.com. "Apple. whose sole product was something called GameLine. Marc Seriff. Tandy. Von Meister was then running Control Video Corporation. On the spot they also hired Steve Case. and General Electric's GEnie). it was a tiny. a deal so unfathomable that. Case's brother Dan. Case was going to do a deal with Apple." Officially.E. Then he pulled off a string of miraculous deals. obsessively.

AOL's stock price dropped nearly 70 percent. They had three children. where Barker. More and more. There were legal problems. communicating largely by E-mail and Instant Messages. or that his second wife. it's probably not surprising that this first marriage unraveled somehow." That person was not to be Steve Case. The response to the flat fee was overwhelming. and. even more quickly than it had risen. "Steve just kept making the right decisions. Case got his title back. examined all the options." In 1998. who concedes that he himself had more than one love affair with a fellow AOLer. collapsed."So I took him to lunch at Clyde's in Tysons Corner. And then. an early on-line service owned by the French government." In 1998. a student at Smith College.. Hiding out in his office. Meanwhile. in Paris for a business meeting with Minitel. As Randy Dean. but it's nothing compared with what AOL faced back then. Less than a month later. now on hand to be responsible for the quotidian. In 1985 he married Joanne Barker at a church in her hometown of Rumson. Not long after AOL's I. Case finally made a decision in October 1996: AOL announced a flat $19. All things were in flux. it moves into the realm of skill. two years after taking their office romance public. She became a schoolteacher. I remember the Elmer Fudd look on his face." Kimsey confided. Case's reputation as a seer was etched in stone. its central nervous system. Day and night. of MTV. along with the promise of a free month of service. The press was saying we were going to die. they went from using AOL for a combined 46 million hours a month to a remarkable 125 million hours a month. he could have said. AOL had seen its revenue grow from $38 million to more than $1 billion. But when you keep doing it." remembered an AOLer who was there at the time. too. More and more. By this time the world was beginning to understand Case's vision. I will tell you. Ignoring the static by tuning out." said Jack Daggitt. an icon of the Internet Age. held meeting after meeting about the future of AOL. with the Federal Trade Commission and various state attorneys general investigating the company's billing policies. had received by mail at least one copy of AOL's free software.. two times-you could chalk that up to luck. AOL's stock hit an all-time high of $94 on December 13. literally: when customers stampeded to sign up. New Jersey. The crisis at AOL Time Warner may be bad. They wanted someone to stand up and comfort them. "One time. In retrospect. He was a good dude. It was hard to resist the digital future on those terms. AOL paid $10 billion in stock for Netscape Communications. One year later. a huge number of users were abandoning AOL and its high hourly rates for other. Clever marketing didn't hurt: every household in the country.95 monthly fee. AOL acquired CompuServe. 'Screw you. They'd met at Williams. in March 1992." Wasn't Kimsey worried that Case might quit? "I knew he was too psychically invested to do that. You know. in a clear sign of its dominance of the on-line industry. AOL's computer servers. Since going public in 1992. AOL announced that it was buying Time Warner for $164 billion in stock. Over the course of just six months. Case had buried the old competition by promoting AOL as a simple on-line service for the masses. Case isolated himself from his employees. would be a senior executive at AOL.O. throughout 1999. AOL had found itself spinning out of control. I'm outta here. there was nothing for Case but AOL. It had to.. But soon AOL's customers were spending more and more of their day on-line. Kimsey also told me the story of how Case. "You didn't have any other social life. refused to stop in at the Louvre. it was all-consuming. We sat there for two hours and I really had to go through it." said Kimsey. 1999. From trading at around $2 a share (split-adjusted) in early 1997. he didn't even want to stop for two minutes and look at the Louvre. Case could become a full-time seer. by demystifying it and making it so innocuous that no one was intimidated by the underlying bauds and megabytes. Case and Villanueva were pronounced man and wife by Billy Graham in a small ceremony at Case's home in Virginia. He could have tried to undermine me. Between May and October of 1996. Jean Villanueva. Microsoft's MSN on-line service . "The company was in tremendous turmoil. it seemed. a former AOL executive.' He could have been petulant. brand-new Internet-service providers that offered cheap flat rates and unlimited access. He took it. he assembled vast amounts of data. In typical fashion. had spent a year.P.E. put it to me. the former C. I admire him tremendously for how he took it and how he conducted himself. "People [at AOL] were hurting. focusing narrowly on the primary question: should AOL move to flat-rate pricing? With Bob Pittman." Case does have what's called a personal life. I know it killed him. "That just tells you everything you need to know about Steve.. It had taken Case many long months to make the decision to buy Time Warner.O. the cost of those millions and millions of free software discs was outpacing the revenue they brought in. "He was so focused on going to the Minitel thing.

though. at some point. Using their considerable influence. when a series of investigative articles in The Washington Post accused AOL of having falsely inflated advertising revenue in the period leading up to the consummation of the Time Warner deal. He was greeted by officials in China basically as an equal. By September 2002. owning massive positions in such companies as Viacom.E. and USA Interactive. According to investment bankers hired by AOL. he looked at merging with eBay." Levin wasn't just a powerful man with worldwide connections. Late last summer. 1999. Jerry Levin has lost his job as C.. even Case himself has had thoughts about spinning off AOL. a vicechairman and a director of AOL Time Warner. To seize the day. Case's troubles began in earnest last July. At last count. Together they'd change history. Case flew to Shanghai to attend a global-business forum hosted by Fortune. On one of the flyers the word "strongly" had been added by hand. his Los Angeles-based firm owned around 8 percent of AOL Time Warner. he had been instrumental in forcing Levin out of AOL Time Warner. less susceptible to a deflation of Internet stocks. So intense was media speculation about Case's future that on September 19. and. where they attended celebrations for the 50th anniversary of Communist rule in China. according to someone close to Crawford. reasoned Case. he approached Disney.O. Some people inside and outside the company have gone as far as to argue that the merger should be undone and AOL spun off. ast-forward three years. At AOL's headquarters. "Steve and Jerry spent a great deal of time talking about their view of the world-about companies that serve to create value for shareholders and operate in the public interest. Turner had already proved his mettle. as 500. most powerful shareholders-Ted Turner. Turner and Crawford began lobbying other major shareholders and directors to demand Case's resignation. it couldn't keep rising forever." After the conference in Shanghai. of the world's most powerful media-and-entertainment company. the company needed to use its inflated stock to buy something huge-something that would make AOL less vulnerable to Microsoft. in Case's eyes he was a sensitive man. Not that he was strictly interested in global business: Case flew to China because one of the hosts of the conference was Jerry Levin. Case and Levin went on to Beijing. and money manager Gordon Crawford of Capital Research & Management-reacted by turning on Case." someone who accompanied Case on that fateful trip told me. "Jerry had a prominent position there. On October 1. the pressure on him to quit is building day by day.. once AOL Time Warner's board meeting had ended without a formal change in Case's employment status. he discussed hooking up with Citigroup.000 soldiers and civilians paraded machine-like through Tiananmen Square along with rows of tanks and patriotic floats. It was blinding. as I reported in this magazine last July. "They shared the same set of values. It was love at first sight. "We support Steve". telling him he should resign. According to a recent report in The Wall Street Journal. The next day.. a Time Warner publication. "He was taken by Jerry's perspective on the world. The smoke has cleared. "Not very much" was the matter-of-fact answer. shortly before a scheduled AOL Time Warner board meeting. at the same time. a company spokesperson took the unusual step of telling reporters. flyers started appearing in hallways and elevators. Internet frenzy had to abate. Crawford even met with Case in New York. That night Beijing was illuminated by fireworks. But the more Case weighed the possibilities. As for AOL's stock price. though not as well known as Turner. where any attack on Case is taken personally by the devoted employees. mainly because the prevailing view inside the F . They read. As for Steve Case. stuck up with tape. the lights are out.was encroaching on AOL. "Steve Case is the company's chairman and he will remain so. News Corporation. Case considered making a deal with WorldCom or AT&T. Crawford. Two of AOL Time Warner's biggest. carries tremendous weight on Wall Street. as in we strongly support steve. the more he focused on Time Warner." I was told by the person who was on the trip. For three decades he has been one of the country's most admired and mimicked media-and-entertainment investors." That announcement has done nothing to stop the intrigue and ill will at AOL Time Warner. reports in The New York Times and the New York Post suggested that the company's directors might vote to fire Case. Steve Case's role at the company was not on the [board's] agenda and not discussed. Case apparently made up his mind: Jerry Levin would be his partner. In late September 1999. That's not likely to happen. concerned with fairness and the greater good of shareholders. Case called Crawford to ask what he could do to patch up their relationship.

hovering around $15 as this article went to press. indeed. Case can be fired only if three-quarters of the board votes against him.company is that things are so bad they can't get much worse. since hitting a low of $8. That's a high hurdle-which is why. more and more. There's nobody at the Time Warner companies that wants him around. So his only constituency is the AOL board members.. I don't think the majority of the board wants him around.. AOL Time Warner's stock has climbed sharply. They will have to carry that boy out in chainshe will never ever leave on his own. and. As for Case: "The odds are heavily stacked against him surviving. to persuade him to sacrifice his position for the glory of the digital future. What are the odds of that? Case himself wouldn't talk to me. "Steve's got very strong support from Dick and the overwhelming support of our board.. the only chance to get rid of Case may be to convince him to leave on his own. Under the terms of the merger. "Steve will endure any amount of misery. because leaders get picked or elected by the acclaim of their constituencies-and he has no constituency..." . but a top AOL executive who is close to him said. "There's no shareholder in the company of any substance that wants him around." "That's bullshit" is how Ken Novack responded to my suggestion that Case's only remaining allies were board members who came from the old AOL." This is the bottom line: the AOL Time Warner board includes seven directors from the old Time Warner board and seven from AOL.. That's all that stands between him and the door. I don't believe Dick Parsons wants him around." one of AOL Time Warner's large institutional shareholders told me recently.70 last July.

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