The Rise and Fall of Steve Case

Posted on January 24, 2003

Eighteen years ago, Stephen M. Case founded a little company called America Online. At the time, no one really knew what the future of computers would be, and no one anticipated the incredible speed at which the World Wide Web would become an accepted part of everyday life. Even Bill Gates didn't see the potential of the Internet in the beginning. In one of the most amazing corporate turnarounds in history, Gates refocused his entire company towards the Internet right about the time of the infamous browser wars. (You remember a little browser called Netscape, don't you? Oh wait, that's owned by AOL now). Overnight, entire divisions of Microsoft were reorganized and personnel were reallocated to different, more net-friendly projects.

As Case's company grew and began to aggressively sign up customers, it became clear to some that hey, this Internet thing was here to stay. And at the height of the tech boom, Case made another bold move, by engineering the merger of Time Warner with AOL; the merger was eventually approved by the FCC in 2000. Along the way he also found time to have an notorious office affair with the then-married Jean Villanueva, VP for corporate communications at AOL, whom he later married after divorcing his wife of 11 years who is the mother of his three children (Source: The Washington Post).

But the bubble was about to burst. Greenspan started raising interest rates (he was worried about inflation, remember?) in 1999. Then investors got nervous and began pulling out of tech stocks, which were wildly overvalued. ("Earnings? We don't need no stinking earnings!" was the mantra of the growth stock cheerleaders.) Then 9/11 hit and the economic boom was officially as dead as videocassettes. The numerous accounting scandals didn't help either. AOL is currently under investigation by the SEC for accounting fraud...something about booking free ad swaps as revenue to boost the stock price or something. (Of course, one has to wonder what the IRS would have thought about failing to report that barter income, but that's another column).

So, here's Case: he's achieved his goal. He is now the head of the largest media conglomerate in the world, which includes such goodies as CNN, Warner Books, Time magazine, People magazine, and Warner Bros and New Line Cinema. The AOL people started pushing around the Time Warner people. The management at CNN went completely nuts and hired soft core porn star Andrea Thompson to anchor Headline News, while firing talented, experienced journalists in a drive to compete with Fox. Even Ted Turner acknowledged in an interview that he made a mistake in giving up control over hiring decisions. (Perhaps he was distracted with his messy divorce proceedings?) Meanwhile, the stock price was falling faster than the waistband of Christina Aguilera's hip-hugger jeans.

At the shareholder meeting in May, it was clear that Case was going to get his walking papers, so he resigned, making it clear in interviews that he really didn't want to go. Richard Parsons has now taken over as both CEO and Chairman of the Board of AOL Time Warner. (Case is still on the board of directors, but who knows how long that will last.) Critics of Case say that he was like a bull in a china shop; that he didn't know anything about running a traditional media company and that the AOL corporate culture clashed with the more traditional Time Warner style. Case himself says he is being blamed for the falling stock price, which is a result of the ailing economy.

So what does Steve Case do now? He's only 44 years old and has millions in the bank. According to the New York Post, Case owns 41.5% of the publicly held plantation, Maui Land & Pineapple Co., and is its largest shareholder. Reportedly, the company is in a heated dispute with arch-rival Del Monte over an exciting hybrid pineapple. So, he could head back to his home state of Hawaii and be plenty busy. But can he really give up the thrill of being the head of AOL Time Warner? Perhaps he's just waiting in the wings, hoping to regain what he once had. Only time will tell, but one thing's for sure: this guy is never boring. So far, no one has grabbed up the rights to film his life story. It has everything: the struggling entrepreneur who rises to fame and fortune, a lurid sex scandal, backbiting, infighting, trysts in a tropical paradise, and even the possibility of a criminal investigation. I think it would make a great movie of the week. Casting ideas, anyone?