Mergers, Failure, and Responsibility

Posted on Thursday, January 7th, 2010 by Print This Post Print This Post

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I recently watched an amazing interview on CNBC with Gerald Levin and Steve Case – two of the masterminds behind the now 10 year old AOL Time-Warner merger. You can watch it here:

To hear these two media leaders with a decade of hindsight behind them discuss how overvalued the original deal was, why it failed, the cultural mismatch of all the parties involved and what companies did it right where they did it wrong, was very interesting to me.  It drew upon many of the principles that I had learned during the M&A rich days of the past decade:  a merger is about the people and if you are successful in blending cultures there is a a much better chance of success than failure. And if you didn’t successfully blend the merging companies, it was not, in the end, going to be a successful venture.

Levin pointed out that AOL and TimeWarner just didn’t fit together – that the cultures were too divergent and that the focus wasn’t placed on finding common ground.  He noted that, like all good merger press releases, a lot was said about 1+1 = 3 or 4, but in this case the 1 was never truly added to the other.  Maybe it was the difference between traditional media companies and Internet innovators.  Perhaps they moved at a different pace, prioritized differently, focused on different success metrics.  And yet, when pushed for a poster child of a success that he would have liked to have mirrored, Levin pointed only to stand alone companies that had successful cultures unto themselves:  WalMart, Comcast, Amazon; however he noted that he is very interested to see how the Comcast culture might influence the merger with NBC/Universal.

So what is it about this enormous deal that causes the former CEO to take personal responsibility 10 years later for ‘the worst deal of the century’?  The Internet was – and still is – about innovation.  In many ways it was the wild west and everyone could stake their claim.  It yielded incredible advancements to our society – life changing improvements and enhancements.  Yes there were failures along the way.  But isn’t that how we innovate – try, fail, iterate, repeat?  Levin seems to have guilt over a faulty valuation, about the recession, about the current state of the economy.  This seems though, a personal demon and not one I would point a finger with blame.  Many people got very wealthy over this deal and lived, at least for a time, at a higher standard.  They re-invested, re-invented and helped to bring other innovations to the forefront.  There ARE plenty of successful internet companies with many more to come.  So this form of making amends is interesting.

The world continues to change very quickly with one time staples in our lives being replaced by new ideas that make the originals obsolete.  A reflective piece on the Today Show last week  reminded us that postage stamps that needed to be licked, and that floppy disks, print copies of the Yellow Pages, cassette tapes and rolodexes no longer have a place in daily life:

Visit msnbc.com for breaking news, world news, and news about the economy

The same may be true for those millions of AOL disks that were mailed over and over to every US household.  But without that disk, how many people would have tried this ‘Internet thing’ and seen what the world wide web had to offer.

It is a new year – a new decade – so maybe this time of resolutions and reflection lead to this mea culpa of corporate responsibility.

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