CARLSBAD, Calif. – Even though he was introduced as "Mr. EBITDA" by Morgan Stanley analyst Mary Meeker before his dinner presentation at The Standard's Internet Summit, AOL Time Warner chief Gerald Levin was not in catering-to-Wall-Street mode last night. He never mentioned the ambitious earnings-growth targets that the company has promised to investors as part of proving the merits of the $64 billion merger.
Instead, a relaxed Levin gushed about AOL's services, and its strategy of maximizing, and surpassing, its 135 million "subscriber relationships" with users. Unlike other speakers at the summit, who were relatively dismissive of the short-term prospects for broadband delivery of Internet services, Levin called it the "final battlefield." He praised the utility of high-speed cable access (the "hottest" consumer growth area in his cable business), and said the key to the future of broadband was "who will deliver it, and what will they provide." He talked repeatedly about the possibilities of services "on demand" – music, movies, news, sports, shopping and the multitude of offerings by the company as it makes the ultimate gamble on Internet content. Who would control the network in the home, he said, is the "$64 billion question."
Levin's enthusiasm is genuine, because as he alluded to several times in his remarks, he's been pursuing some form of video-on-demand for well over a decade. A techie since his early days at Time Inc.'s HBO, Levin has chased the dream through a number of false starts, including a much-chronicled Time Warner-sponsored failure in Orlando, Fla., a decade ago. So he seemed delighted to recount tales of the sheer reach that AOL has provided him. He reported, for instance, that 40 percent of the moviegoers who gave the Warner Brothers film Cats and Dogs a successful opening weekend this summer went through AOL's Moviefone service to do so. He also made reference to Madonna, whose sold-out tour had benefited from heavy marketing on AOL.
Levin also kept returning to the company's big push for global expansion, noting that in the past month he'd been to China, Turkey, Germany, France and Switzerland. He's told his executives to start thinking of the domestic market as the "North American territory," and said the music business understood this best. That notion is counterintuitive at best; the music industry is generally seen as hidebound. He said the name "America Online" is no impediment to the company's overseas plans.
At the same time, he mentioned the company's interest in expanding local content for consumers – movies, restaurants, news – which is another old Levin mission. Time Warner's Roadrunner service tried this in the mid-1990s with lackluster results.
He declined to be drawn into a recurring theme at the conference: the anticipated showdown over the gathering of customer data between Microsoft, AOL Time Warner and a loose collection of open-platform interests spoken for by Sun Microsystems' Scott McNealy. Asked about Microsoft, Levin replied, "Who?"
This week's announcement that AOL Time Warner has invested $100 million in Amazon.com and has agreed to an expanded e-commerce alliance was "strategic," Levin said, but he was bothered by Wall Street's focus on the price, as well as by the idea that this was a shot across the bow of competing with Microsoft's new Passport service.
He described the Redmond, Wash.-based software colossus as "a competitor." Then he added, "I don't want to say we're so far ahead in terms of the customer experience."
Of course he doesn't.
