Even in the friendliest of takeovers, the seller's CEO rarely lasts long at the combined companies. Few bother to stay on as more than a director, vice chairman or perhaps "consultant."
So Jerry Levin, 62, is right on schedule, announcing his retirement 11 months after completing the sale of Time Warner Inc. to America Online. What's unusual about his departure is that Levin is controlling the deck, not only leaving the table on his own timing but dealing a tremendous hand to his chosen successor, former Time Warner President Richard Parsons.
Levin's departure seems to be friction-free, less the product of corporate politics than of personal needs: a desire either to do something more fulfilling than running America's largest media/Internet conglomerate or simply to reduce responsibility and stress. He, of course, contrasts with Ted Turner, who now contends that he has been corporately emasculated, proclaiming two weeks ago that selling his Turner Broadcasting System to Levin in 1995 was the worst mistake he ever made.
Still, Levin's move left insiders and outsiders in a swirl, startled both by its abruptness and the ascent of Levin's Parsons over AOL former President Bob Pittman. The two men have been co-COOs since the takeover, but industry executives had widely seen Pittman as hungry to take the CEO slot under the relatively passive AOL Time Warner Chairman Steve Case.
Levin said in a memo to employees that his decision followed "a year-long discussion about succession with our board of directors and much personal reflection." He added that he wants to "turn my full energies to the moral and social issues I feel so passionate about. That time has arrived."
"This takes Jerry out at an all-time top," said Leo Hindery, chairman of Yankee Entertainment Service and former president of Tele-Communications Inc. and AT&T Broadband. It should have been clear to everyone that Levin was preparing to quit, Hindery said, when he and New Regency Films CEO Arnon Milchan bought 600 acres in Santa Barbara County, Calif., to start a vineyard and winery.
Indeed, Levin has been hinting at retirement for months. Speaking at an investment conference last April, he said that he won't be like "my good friends Sumner Redstone or Rupert Murdoch," meaning that "you will not have to carry me out of AOL Time Warner." He added that he wouldn't leave until he saw through the integration of the Internet and TV businesses that drove AOL to buy Time Warner. He repeated the same sentiments at a cable convention weeks later.
Industry and Wall Street executives don't expect dramatic change from Levin's departure, particularly because he is being succeeded by Parsons, who now becomes one of the most powerful black executives in corporate America. In the six years since Levin tapped him as his number two at Time Warner, Parsons has displayed a calm demeanor and managed much more by assent than by dictate, an approach developed during his days on the staff of New York Gov. Nelson Rockefeller and as a savings-and-loan executive.
Levin, who has always been seen as contemplative, was clearly emotionally battered by the 1997 murder of his son Jonathan. Despite his family's wealth, Jon Levin taught in a Bronx public high school and was murdered by a former student, who tortured him until he revealed his ATM code.
Associates say Levin was similarly affected by the terrorist attacks on Sept. 11, becoming even grimmer since the tragedy. "He's been a little depressed, very shaken," said one AOL executive. "It sounds clichéd, but he took it very hard."
Levin has played a pivotal role in the development of the cable business. A lawyer, he started at what was Time Inc. as the finance director of Sterling Cable, Chuck Dolan's venture to wire Manhattan for cable, one of the early major-market system builds. He was CEO of Home Box Office when the pay service made the groundbreaking 1976 move to distribute its signal nationwide by satellite rather than by microwave in 30-mile hops. He went back to the cable unit, which morphed into American Television & Communications, then moved to Time Inc. corporate.
"Jerry's in the true handful of people who, when the history books are written, helped define this industry and lead it for decades," said Comcast President Brian Roberts.
For all of Levin's humanitarian instincts, he played corporate politics as well as anyone. As one of the chief negotiators of Time's 1990 takeover of Warner Communications, he ingratiated himself with the Warner executives, especially Chairman Steve Ross, who began to dominate the merged companies much as Time Warner executives are dominating AOL Time Warner. Time Inc. President Nick Nicholas was supposed to succeed Ross as Time Warner chairman but was abruptly ousted a year after the merger was complete, and it was his deputy Levin who replaced him in the line of succession.
When Ross was within days of dying from cancer, Levin reconstituted the company's board of directors, a move that other industry executives saw as squeezing out Warner loyalists and retaining members who would be more supportive of Levin. When Ross died in January 1993, Levin had control.
Levin's biggest accomplishment as chairman and CEO was acquiring Turner Broadcasting System, a delicate task that required the assent of both Ted Turner and then-Tele-Communications Inc. CEO John Malone, both of whom owned stakes as large as Time Warner's. Although Ted Turner has since blasted the deal, the cable programmers' surging cash flow has carried the company through tough times at Warner's music and movie units.
Levin has made mistakes, though. One was putting Warner Bros. and Time Warner Cable into the Time Warner Entertainment partnership, selling pieces off first to trading company Itochu and electronics maker Toshiba and later to telco US West. Cable was becoming a burden, not a prize. Cash from the sale pared debt, but that restrained Time Warner from full control over what later became prize operations. Levin started trying to unwind that deal almost as soon he made it, and 26% is now in the hands of AT&T.
Another mistake may have been the sale to AOL. The deal was born out of anxiety. In late 1999, Levin was nervous that he didn't have any substantial Internet play, his big pushes into magazine portal Pathfinder and entertainment portal Entertaindom having fizzled. AOL's Case worried that he didn't have a content play. Blocked in an offer to buy AOL, Levin instead agreed to sell in January 2000.
He pulled the trigger too fast. Internet stocks started sliding in March and were clearly in free fall in April.
The deal seems to be working out well, but, if Levin had waited, he would likely have been the buyer, not the seller. "Not that it would have made a huge difference," noted one investment banker. "The Time Warner guys are all running the place."