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The measure of success, of course, is whether AOL Time Warner can meet the stratospheric financial goals Case and Levin set a year ago, when they promised Wall Street that in 2001 the company's operating profit would grow by 30%, to $11 billion. Despite the Internet downturn, AOL's growth this year is still an impressive 23% (the company is adding about 1 million subscribers every six weeks). But Time Warner's growth is beginning to slow. The movie and music businesses are troubled. And if economic doldrums hit next year, ad revenues are likely to take a hit. "They've clearly made some promises that don't leave us any room for failure," says a top Time Warner executive. "In fact, the real question is, Are we just going to pull that $300 million to $400 million [the extra profit the company must generate to meet expectations] out of the air?"
The fear is that the AOL contingent will drive for growth too fast. There are rumors that the music or movie businesses might be sold, although Parsons denies this. And at Time Inc., the publishing division, there is concern that fledgling projects, including magazine start-ups, might be cut because the new regime is so short-term oriented. "The minute there is a case where we're being asked to cut into our core business because some other division didn't make its numbers, there's going to be trouble," says an executive. "If top people like Logan, [Jeff] Bewkes, [CEO of HBO] or Terry McGuirk [CEO of TBS] throw their hands up and leave, the AOL people won't have a clue how to fill those jobs."
Big mergers often fail (see DaimlerChrysler and AT&T/TCI). In a staff memo just days after the merger was announced, Case and Levin asserted that the new company would "fundamentally change the way people communicate." That's a tall order. And no matter how hot the paradigm or how far and fast the technology reaches, AOL Time Warner is still in the business of satisfying finicky consumers, who want content from everybody, for nothing if possible. It will take more than synergy for this new Internet-age media colossus to succeed. And as Case and Levin would be the first to suggest, there's no room for failure.
--With reporting by Adam Zagorin/Washington