Time Warner ruined AOL, says ex-AOL exec Ted Leonsis


Leonsis talks about that other big Time Warner deal on the latest Recode Decode.

AT&T is planning to buy Time Warner for $85 billion, which has given several folks in the media world a heavy dose of déjà vu.

Back in 2000, a $164 billion deal created AOL Time Warner, unifying distribution and content along very similar lines to those now being preached by AT&T’s leadership. The results were disastrous. And one of the guys who was there — longtime AOL executive Ted Leonsis — said in hindsight that buying Time Warner wrecked the company’s momentum.

“There was friction in the system, even though the base idea [was right:] Convergence, that everything on paper, everything on plastic would become Xs and Os and would be delivered on a platform if you had everyone’s credit card,” Leonsis recalled on the latest episode of Recode Decode, hosted by Kara Swisher. “And you could stream things, because AOL was a private internet. We were the original cloud-based service. But it was just such a big merger and it became so distracting.”

For example, after buying instant messaging company ICQ, AOL had been planning to build telephony features into a future messaging product. However, Time Warner put the kibosh on that.

“The cable company had its triple play going, so, ‘Oh, you can’t do that,’” he said. “All of a sudden, we went from being young, nimble, playing offense, to really being a defender. And I didn’t like that.”

Leonsis was interviewed in September, before the AT&T-Time Warner deal was announced. Now a majority owner of several sports teams and investor in tech companies around the country on behalf of Revolution Growth, he acknowledged that one of AOL’s big mistakes was deciding to become a next-generation media company instead of buying up other nascent internet startups like Amazon, Yahoo or Google.

“We owned, along with Yahoo, I think eight percent of Google at the time,” he said. “I did the deal with Sergey [Brin] and we went on the press tour together. He’s such a great guy. I remember him saying, ‘We know our place. We’re just going to license you some search technology, and we’re so appreciative.’ And then I wake up one day and, basically, they took everything we did on AOL — mail, messaging, maps, streaming video, you just go down the list — and they did it better, faster cheaper.”

You can listen to Recode Decode in the audio player above, or subscribe on iTunes, Google Play Music, TuneIn and Stitcher. And don’t miss this week’s first episode, in which Kara spoke to “Mr. Robot” creator Sam Esmail.

If you like this show, you should also sample our other podcasts:

  • Recode Media with Peter Kafka features no-nonsense conversations with the smartest and most interesting people in the media world, with new episodes every Thursday. Use these links to subscribe on iTunes, Google Play Music, TuneIn and Stitcher.
  • Too Embarrassed to Ask, hosted by Kara Swisher and The Verge’s Lauren Goode, answers the tech questions sent in by our readers and listeners. You can hear new episodes every Friday on iTunes, Google Play Music, TuneIn and Stitcher.
  • And Recode Replay has all the audio from our live events, including the Code Conference, Code Media and the Code Commerce Series, which just wrapped up its October event in Las Vegas — and audio of those interviews is coming soon! Subscribe today on iTunes, Google Play Music, TuneIn and Stitcher.

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