AOL-Time Warner Merger: Industry Still Ponders Impact

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The AOL-Time Warner merger raises questions on collaboration vs. cultural divide as leadership reshapes media content and strategy.

AOL-Time Warner Merger Uncertainty

Half a year has passed since AOL announced its intention to acquire Time Warner, and the entertainment industry is still pondering whether this merger will foster collaboration or lead to a cultural divide.


Currently, the film and television divisions at Warner remain largely unchanged. The new leadership team, led by Chairman and CEO Steve Case along with President and COO Robert Pittman, has not imposed any specific guidelines regarding budgets or content themes, nor have they issued directives to the production executives they’ve interacted with.


AOL’s primary objective appears to focus on generating compelling content to enhance their service offerings and leveraging technology to maximize the potential of Warner's extensive media archives.


Nonetheless, the AOL influence is already evident in certain areas. The WB Network has been discreetly transitioned under AOL’s supervision, with Pittman at the helm, and there is ongoing speculation surrounding the potential integration of the Warner website, known as Entertaindom, into AOL's platform.


On a positive note, Warner has garnered commendations for its successful integration of pay-per-view and video-on-demand services, now managed by Warren Lieberfarb, a key figure in developing the DVD technology.


However, the integration may not unfold without challenges.


There appears to be a disconnect between AOL and Warner in several technological domains. For instance, AOL recently invested significantly in the digital video recorder company, TiVo, whereas Warner had previously backed its competitor, Replay TV, just a few months prior.


The transition began last year when Bob Daly and Terry Semel exited their roles as co-heads of Warner Bros., signaling the end of a long-standing era of executive leadership that some characterized as rigid.


Shortly after Barry Meyer took over as chairman-CEO of Warner Bros. and Alan Horn stepped in as president-COO, AOL revealed its $164 billion acquisition of Time Warner on January 11.


This corporate shift triggered numerous changes within the organization. Over the past year, high-profile departures have included Jim Miller, president of worldwide theatrical business operations, Ed Frumkes, president of international distribution, and cable executive Ed Bleier, while human resources head Adrienne Gary is also in discussions to leave.Following the departure of Miller, Steve Spira, the executive vice president of business affairs, saw an increase in his responsibilities, taking on some of Miller's former tasks, which received positive feedback from producers. Spira has recently secured a multi-year contract extension.


“One time, we had a powerful group of executives at Warner Bros.,” noted one producer. “Currently, the power seems to rest solely with Alan Horn and Lorenzo di Bonaventura, and there doesn’t appear to be a successor in sight.”


The Role of Horn


In this new structure, di Bonaventura has assumed a more pivotal position: while Horn ultimately decides on project approvals, it is di Bonaventura who acts as the gatekeeper, determining what proposals reach Horn.


Warner Bros. is no stranger to merging different corporate cultures; the studio has been under corporate ownership since 1967, when it was bought by Seven Arts Productions. This entity evolved into Warner Communications, and its acquisition by Time Inc. in 1989 resulted in a massive corporate entity.


In comparison to today, that merger seems almost nostalgic, representing a union of traditional media companies. The AOL-Time Warner acquisition, however, places the leadership of the largest media organization in the world in the hands of the internet.


This shift has brought forth an unsettling realization within the 77-year-old studio, as the new media environment makes the film industry appear stagnant.


“AOL will operate Warner Bros. according to its own vision,” remarked a producer on site. “It's Steve Case's enterprise. To think otherwise would be naive.”


Amidst these changes, Time Warner’s chairman, Gerald Levin, is recognized for his adeptness in navigating corporate challenges and surviving in the corporate landscape.


The AOL deal also marks the return of Robert Pittman, a former executive who was appointed president and CEO of Time Warner Enterprises in 1990. He departed in late 1995 following a deal to sell Time Warner's Six Flags parks to Boston Ventures. Although Pittman was initially part of that agreement as CEO of Six Flags, the transaction was completed without him due to contract negotiations falling through.


“There is a sense of uncertainty regarding Pittman’s influence,” shared one producer on the lot. “He’s intelligent, sharp, capable, and determined. And he has been successful.”


Leadership Impact Assessment

Evaluating the impact of Meyer and Horn's leadership remains premature.


Despite Horn having approved over 20 films, the first release from Warner under his greenlight, "The Replacements," won't hit theaters until August 11.


Notably, the studio has ambitious plans with 25 films scheduled for launch in 2001, indicating a commitment to maintaining its production pace.


Among the projects that received Horn's endorsement in 2000 are titles like "13 Ghosts" from Silver Pictures, "Training Day" featuring Denzel Washington from Outlaw Productions, and Castle Rock's "Miss Congeniality," starring Sandra Bullock.


The lineup showcases a diverse array of films, spanning blockbuster franchises like the "Matrix" sequels and "Harry Potter" to thought-provoking dramas such as "Pay It Forward," which stars Kevin Spacey and Helen Hunt, as well as family-friendly content devoid of major stars.


While "Perfect Storm" received a greenlight from Daly and Semel, Horn and Meyer took a bold approach by opting not to seek external financial partners and standing firm on their release date, even as Columbia's "The Patriot" posed competition.


As Daly and Semel's tenure concluded, their reliance on formulas such as sequels and star-driven narratives had waned.


The directive now emphasizes the importance of crafting exceptional scripts prior to casting, with the goal of staying within budget.


Warner Bros. veterans note that this approach marks a significant shift from the practices of Daly and Semel, who tended to anchor projects around high-profile actors.


In this current dynamic, Meyer and Horn operate more as collaborators than partners; as one industry insider remarked, "Barry's the boss," highlighting their distinct professional relationship.


Currently, the duo enjoys a favorable reception in Hollywood, with descriptors like "accessible," "straightforward," and "honest" frequently used by their supporters.


Nevertheless, some critics point to Horn's history at Castle Rock, a studio often criticized for its conventional approach and, more recently, a lack of significant successes.


Di Bonaventura's Classics Initiative

Those familiar with Horn suggest that he prefers not to engage with graphic comedies or provocative content, yet he recognizes the demands of the market.


To bridge this gap, he turns to Di Bonaventura, a champion of both indie successes like “Romeo Must Die” and major hits such as “The Matrix.”


Di Bonaventura’s unique ability to tap into popular trends — an interesting twist for someone with a Harvard background and the son of a renowned symphonic conductor — reflects his resilience in the film industry, even amidst criticism.


One producer noted, “Every time you think he’s finished, he reinvents himself and thrives.”


Classics Division


Di Bonaventura appears to be solidifying his influence by pushing Warner Bros. to establish a classics division, a move that would end its distinction as the only major studio without one.


Critics often point out that while Warner Bros. excels in marketing mainstream films, its track record with smaller, more artistic projects has been inconsistent.


However, this could be changing.


The concept of a dedicated release branch for such films gained traction following Warner Bros.' three-year co-production agreement with FilmFour in the U.K. The first project, the WWII drama “Charlotte Gray,” will feature direction by Gillian Armstrong and lead performance by Cate Blanchett.


Di Bonaventura credits his experience on projects like David O. Russell’s “Three Kings,” which he championed against significant opposition at Warner Bros., for inspiring his vision for a classics division.


While he has long advocated for this, Semel was resistant, whereas Horn has shown a willingness to consider it.


Several independent executives have been discreetly approached regarding leadership roles in this emerging classics division.


Yet, it remains uncertain what responsibilities this position would entail, although Di Bonaventura is expected to play a pivotal role in any Warner Bros. classics initiative.


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