Gerald Levin
1939–

Retired chairman and chief executive officer, AOL Time Warner

Nationality: American.

Born: May 1939, in Philadelphia, Pennsylvania.

Education: Haverford College, BA, 1960; University of Pennsylvania, LLB, 1963.

Family: Son of a butter-and-egg businessman and a piano teacher. Married Carol Needelman (divorced); married Barbara J. Riley, 1970; children: five.

Career: Simpson Thacher & Bartlett, 1963–1967, corporate lawyer; Development and Resources Corporation, 1967–1969, unknown position; 1969–1971, general manager and CEO; International Basic Economy Corporation, 1971–1972, representative in Iran; Time, 1972–1973, vice president of programming for Home Box Office; 1973–1975, president and CEO of HBO; 1975–1976, vice president; 1976–1979; chairman of HBO; 1979–1984, group vice president for video; 1984–1990, executive vice president; Time Warner, 1990–1991, vice chairman; 1991–1992, COO; 1992–2000, president and co-CEO; AOL Time Warner, 2000–2001, CEO.

■ Gerald Levin is likely to be remembered as the executive who drove Time Warner to near failure. American Online's purchase of Time Warner in 2000 for $165 billion was the biggest merger to date and the best evidence of the convergence between old and new media, but it was also a financial disaster. In the 2002 fiscal year the company's stock price dropped to about $9 per share—a record low—and the price of its bonds plummeted to the levels of junk. Throughout his career, Levin deliberately refused to play the part of "media mogul." Yet while he was being underestimated and misunderstood, this shrewd corporate politician built a career whose highlights included orchestrating three corporate mergers, ousting several of his would-be rivals, and clinging to power despite steady Wall Street criticism of his leadership style. A resolutely bland executive who preferred discussing books to

balance sheets, the final chapter of his corporate career was ultimately shaped by the murder of his son and a publicly failed merger. Upon his retirement, Levin, who once wanted to become an English teacher and a novelist, cited his desired to "bring the poetry back into his life."

AN EARLY ACHIEVER PUTS HIS VALUES FIRST

The grandchild of Holocaust survivors from Eastern Europe, Gerald Levin went to sleepover camp when he was just five years old. Before he was 10, he knew enough Hebrew to conduct a service at the local synagogue when the cantor failed to show up one Saturday. It has been widely reported that Levin was a biblical studies major at Haverford College and that Haverford caused Levin to question his strict Jewish upbringing. While he was valedictorian and won honors for his thesis, on principle he rejected the honors and burned all of his papers to make a philosophical statement that the work counted more. As he told Michael Oneal in BusinessWeek : "My thesis was on the continuity between the Judaic and Christian traditions. I made a complete transformation through college, coming out very spiritual, but a-religious" (December 11, 1995).

AN EARLY CAREER START IN CABLE HELPS AN INDUSTRY MATURE

After law school, Levin became a corporate lawyer with the firm of Simpson Thacher & Bartlett (1963–1967) and was affiliated with the Development and Resources Corporation, an international investment and management company. In 1969 he became the general manager and CEO. After his company was acquired by International Basic Economy Corporation (IBEC) in 1971, Levin served as IBEC representative in Iran for a year. He joined Time in 1972, as vice president of programming for Home Box Office (HBO). He was named president and CEO of HBO in 1973. Levin advised Time to put HBO on a satellite and beam it across the country. HBO became the first national cable network and remains one of the industry's most profitable. Levin's move revolutionized cable network distribution. It also assured HBO's survival and earned Levin the in-house nickname "resident genius." In 1976 Levin was named chairman of HBO and a vice president of Time and was appointed group vice president for video, overseeing operations at American Television and Communications Corporation as well as HBO, Time-Life Films, and other video interests.

MINOR SETBACKS LEAD TO GREAT SUCCESS

By 1984 Levin had become Time's top corporate strategist, with a mandate to think broadly about the company's future. Still, during the 1980s several high-profile, Levin-sponsored projects bombed, including Teletext, a service designed to deliver on-demand news to TV via cable, which cost $35 million before Time ended it. Subscription TV lost as much as $100 million. Worse was a movie-development deal with Tri-Star Pictures that left the amount of Time investment in the films uncapped. No matter how much a film ran over budget, Time wound up paying a third of the cost.

Levin was elected to the Time board in 1988, and it was on Levin's recommendation that the company agreed to merge with Warner Communications in 1989. After Paramount Communications tried to sabotage the deal, Levin and his colleagues were forced to revamp their merger as a $14 billion acquisition of Warner. Time prevailed, but the legacy was a suffocating debt load that the company struggled to overcome. Moreover, the companies also proved to be culturally mismatched. It appeared that Time's staid executives could not mesh with their free-spending Warner colleagues.

A TOP EXECUTIVE BECOMES A RELUCTANT MOGUL

Gerald Levin became vice chairman of Time Warner upon the merger of Time and Warner Brothers in 1990. Melding the East Coast Time and the West Coast Warner Communications challenged Levin's will to survive. He plunged into Warner with abandon, befriending influential executives and acting as head cheerleader for the merged companies. He also cultivated what was to become a pivotal alliance with Warner's charismatic chairman, Steven J. Ross. After Ross died from cancer, Levin engineered the stunning ouster of his own archrival at Time, Nicholas J. Nicholas. Levin told Nina Munk, a Vanity Fair contributing editor, in her book, Fools Rush In: Steve Case, Jerry Levin, and the Fall of AOL Time Warner : "It's absolutely true that I plotted the departure of Nick Nicholas after working with him for 20 years. And I don't have justifications for it other than that I'm a strange person. Sometimes we impute meaning and purpose to things that are totally adventitious or accidental."

Levin served as COO of Time Warner from 1991 to 1992 and was named president and co-CEO in 1992. A hallmark of Levin's enigmatic nature was his firm notion that he need not be eccentric or charismatic to lead a media company. One Time Warner director, Lawrence B. Buttenwieser, said at that time: "He hasn't said he's going to start wearing lifts in his shoes or get a nose job. He's not fabulously attractive to the press. But that, in the final analysis, is not what counts" (BusinessWeek, December 11, 1995).

HANGING ON DESPITE CRITICISM

In the mid-1990s Levin spent heavily on cable, even as the industry languished and investors complained. At the time, the stock crept along at a compounded annual growth rate of 3.8 percent—compared with 10.5 percent for the Standard & Poor's 500-stock index. Said Travelers Group senior vice president for Investments Harvey P. Eisen: "It's obscene. I'm a simple guy. I want the stock to go up" (BusinessWeek, December 11, 1995).

The company was lambasted for distributing violent music, and Levin, claiming that the company was simply spreading proactive ideas, was ridiculed for its self-righteousness. Then Levin personally pushed Time Warner to invest $100 million in the Full Service Network, launched in December 1994 in Orlando, Florida. The interactive television demo was designed to deliver video-on-demand, online shopping, games, and other interactive services. Levin later acknowledged its collapse, saying: "And then there was the famous Vietnam failure of interactive television in Orlando, where I learned most of what I now know" (Multichannel News, April 22, 2002).

When Levin pushed Time Warner to acquire Turner Broadcasting System in 1996, outsiders assumed that he was on his way out. But Ted Turner's empire largely removed him from the day-to-day operations of successor entities, and Levin's survival was ensured by the bull market. An economic boom lifted movie ticket revenues, sales of Time Warner recording artists, and magazine publishing revenues. This caused Time Warner's stock to rebound. Analysts rallied around Time Warner stock, saying Levin's daring acquisition of Turner Broadcasting System had steadied his foothold at the helm of the media empire. "For many years, the proper word to describe his situation was embattled," said Harold Vogel, a media analyst at Cowen & Company. "But he was coming out of a difficult period and looking much stronger" (New York Times, June 5, 1997).

Levin's management style was to use his impressive mastery of facts to sway the Time Warner board on his controversial acquisitions and strategies. His unrelenting appetite for information and fierce personal drive were legendary. Each morning, after a jog at dawn, Levin read five newspapers, various media and entertainment journals, and the wires. He saw every movie that Warner produced, not to mention most of its TV shows. It was not unusual for him and his wife, Barbara, to spend the entire weekend watching movies. He slept a mere four to five hours a night.

DEATH OF A SON BECOMES A DEFINING MOMENT

In 1997 Levin's 31-year-old son, Jonathan, a popular English teacher at a high school in the Bronx, New York, was murdered by a former student. The loss devastated the Levin family. The funeral service brought two worlds together and was attended by Jonathan Levin's students as well as some of the country's most prominent media executives, including Ted Turner; Viacom's chairman, Sumner Redstone; and USA Networks' chairman, Barry Diller. In one eulogy a rabbi recounted that Gerald Levin had said that his son's teaching was more important than what Gerald had done with his own life. Fay Vincent, a director of Time Warner and a friend of Levin's, recalled, "I don't think I ever saw a guy so devastated. He couldn't walk at the funeral. It was a defining moment" (New Yorker, October 29, 2001).

For the first two months following his loss, Levin stayed clear of the office and even contemplated quitting, but he had something of an epiphany. "I thought at the time I wasn't going to return to the company. And then I decided, 'Let's see if I can make happen through my position some pretty important things, and carry on in that way.' Maybe that's why nothing can affect me. So I'm more fearless, more of a missionary" (New Yorker, October 29, 2001). His son's death also appears to have softened his personality. Levin was touched when Warner Brothers, a division of AOL Time Warner, released Pay It Forward, a movie about how a boy tries to make the world a better place. Levin said the movie's message was personally important to him.

A MEGAMERGER PRODUCES AN EMBATTLED KING

Levin's resolute belief in his own ideas manifested in a history-making merger. In January of 2000 the announcement of a merger between AOL and Time Warner made headlines. With the specter of the 1999 failure of a similar proposed merger between USA Networks and Lycos hanging over them, AOL and Time Warner worked diligently to reassure investors that their combination made strategic sense. They met with top shareholders, extolled the virtues of the deal to the press and promised to come forward with more details about linkups between the two companies.

Levin—the man who did not wear a tie to the two companies' historic press conference—became "the single most powerful person in media and communications," said Barry Diller (New Yorker, October 29, 2001). The merged company surpassed all other communications firms in its reach and vast holdings. America Online brought its flagship online service, Netscape, and several interactive services to the merger. Those operations were combined with traditional media outlets spanning film and TV, music, cable, publishing, and professional sports and included such brands as Warner Brothers, Time Warner Cable, and Warner Music. Levin called the AOL service the new company's "crown jewel" and the key to expanding internationally.

Levin, along with the company's chairman, Steve Case, made clear their mission to make AOL Time Warner the premier growth company. Success was measured in growth and profit, and each division's quarterly performance was monitored at the twice-monthly CEO meetings. Commenting on his company's financial focus, Levin said: "I'm a hawk on margins" (New Yorker, October 29, 2001).

Still, Levin's future seemed uncertain. One camp believed that AOL Time Warner would ultimately belong to Case and Robert Pittman, who became the co-COO of AOL Time Warner, and that Levin would cash out after a few years as CEO. But considering Levin's history of outlasting his rivals, another camp thought that he was there to stay. In June of 2001 he hinted that he would remain beyond December 2003, when his contract was set to expire. "At some point, I'm going to retire," Levin told CNN's Larry King. "But not in the near future. I love what I do" (USA Today, December 6, 2001).

Levin placed enormous pressure on himself immediately after the merger, pledging to produce 2001 revenues of $40 billion and cash flow of $11 billion. His timing for making aggressive promises could not have been worse. With the media industry hurting from a slump in advertising spending, AOL Time Warner suffered financially after the terrorist attacks of September 11, 2001. He spent most of the rest of that year convincing Wall Street that the company could meet its lofty targets but finally conceded that the weak advertising market and economic climate would prevent the company from achieving its goals. In December 2001 he abruptly retired, exercising an option he had put in his contract after his son's death that allowed him to leave with six months' notice.

With the newly merged company still unformed, why did Levin leave? Some executives privately speculated that Levin had lost a battle to extend his contract past 2003. And others wondered whether karma had simply crept up on Levin, who had engineered the ouster of many of his former coworkers. Said one high-ranking executive, who spoke anonymously: "I don't believe in a million years he left voluntarily. Why would a guy who is this young, who has the job running the world's largest and most powerful media conglomerate, just walk away?" (Los Angeles Times, December 6, 2001).

For his part Levin said he was delivering on a pledge that he had made to his family and himself to focus more on the right side of his brain: "One can write novels. One can do something with movies. I'm viewed as a corporate suit and have been for many years. There's a personal identity here that rises above all that" (USA Today, December 6, 2001).

In May of 2002 Levin exited, leaving behind angry investors. In a short address Levin thanked his family, board members, executives past and present, and the company's employees. "It's a sad ending," said Jessica Reif Cohen, a media analyst at Merrill Lynch, "But this is the worst acquisition in media history, given the decline in market value of AOL" (Los Angeles Times, May 17, 2002).

A HISTORY STILL BEING WRITTEN

Levin's corporate legacy has yet to be determined. In hindsight, AOL's interest in teaming up with Time Warner is understandable, but the question that is more difficult to answer is why Levin would sell his company to what amounted to an Internet service provider that was about to be eclipsed by faster services, including Time Warner's own cable systems. Some critics might make the case that the elder Levin failed to understand and accurately analyze media run by executives 25 years his junior. Others argue that Levin, suffering from prolonged depression related to the loss of his son, used faulty judgment. Only time will tell. Levin himself has speculated that a reason for the failed merger was ineffective leadership after the merger. He told Jill Goldsmith in Daily Variety : "There was a lack of moral and spiritual leadership. Put aside synergies, all of the investment banking cliches. It's all about what's the meaning, what's the meaning and purpose of that company? And who represents that? Who provides the moral leadership?… And that's what I think we were missing at the time" (February 18, 2004).

In 2002 Robert Hughes, Time magazine's own art critic, confronted Levin in an e-mail message later published in a London newspaper. "How can I convey to you the disgust which your name awakens in me? How can you face yourself knowing how much history, value and savings you have thrown away on your mad, ignorant attempt to merge with a wretched dial-up I.S.P.?" (October 14, 2002). At least three books have tried to answer that question, and a fourth was on the way to being published at the beginning of 2004. In Fools Rush In, Munk makes a convincing case that Levin destroyed the legacy of Henry Luce, Time's founder. A symbolic sign of Levin's failed merger came in September 2002 when AOL Time Warner's directors voted to rename the company Time Warner.

But Levin appeared to remain above the fray. He told Leslie Cauley in the New York Times : "I put a lot of things on hold in my life for the sake of being a high-performing executive. It's been wonderful to discover that I really can have a life outside of Time Warner. Now I'm on a spiritual journey, and it's one that I intend to savor every step of the way. I want to be known as a social activist in education and mental health and, eventually, a writer" (February 2, 2003).

See also entries on Time Warner Inc. and AOL Time Warner Inc. in International Directory of Company Histories.

sources for further information

Auletta, Ken, "Leviathan; How Much Bigger Can AOL Time Warner Get?" New Yorker, October 29, 2001, p. 50.

Cauley, Leslie, "After a Tense Exit, Levin Tells His Side," New York Times, February 2, 2003.

Farrell, Mike, "Levin Stresses Integrity in Business,"Multichannel News, April 22, 2002, p. 8.

Goldsmith, Jill, "Inside Moves," Daily Variety, February 18, 2004.

Hofmeister, Sallie, "Angry Investors Say Goodbye to AOL Chief," Los Angeles Times, May 17, 2002.

Hofmeister, Sallie, and Edmund Sanders, "AOL Chief Announces Retirement; Media: Gerald Levin's Plan to Leave Company Catches Even Some of His Own Executives Off Guard. Longtime Deputy Richard Parsons Is Named Successor," Los Angeles Times, December 6, 2001.

Hughes, Robert, "Time's Art Critic Critiques Case and Levin's Handiwork," Online Reporter, October 14, 2002.

Landler, Mark, "A Father with Power in the Media World and Pride in His Son," New York Times, June 5, 1997.

Lieberman, David, "AOL Time Warner Chief to Step Down as of May," USA Today, December 6, 2001.

Liptak, Adam, "You've Got Travail," New York Times, January 18, 2004.

Munk, Nina, Fools Rush In: Steve Case, Jerry Levin, and the Fall of AOL Time Warner, New York: HarperBusiness, 2004.

Oneal, Michael, "The Unlikely Mogul" BusinessWeek, December 11, 1995, p. 86.

Smith, Liz, Newsday, October 7, 2002.

—Tim Halpern