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

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.”

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