The AOL Time Warner Disaster | The Deal of the Century | 2

Summary

Business Wars: The AOL Time Warner Disaster | The Deal of the Century | Episode 2

Release Date: July 30, 2025
Host: David Brown
Network: Wondery

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1. Introduction and Background

In this gripping episode of Business Wars, host David Brown delves deep into one of the most ambitious and tumultuous mergers in corporate history: the union of AOL and Time Warner. Titled "The AOL Time Warner Disaster | The Deal of the Century | 2," the episode meticulously chronicles the high-stakes negotiations, internal conflicts, and external pressures that ultimately led to the downfall of what was once heralded as the merger of the century.

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2. The Failed Initial Negotiations

The story begins on New Year's Eve, 2000, at Jerry Levin's gated Vermont home. Levin, then CEO of Time Warner, reflects on the failed merger talks with AOL just eight days prior. The primary stumbling block was the equity split: AOL's CEO, Steve Case, demanded 60% of the merged company's stock, while Levin insisted on a 50% share. This impasse left Levin regretting potentially throwing away the transformative opportunity to pivot Time Warner into the digital age.

“Merging with AOL could turn Time Warner from a 20th-century media business into a 21st-century one. And he's about to throw that opportunity away.”
– David Brown [00:00]

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3. The Strained Negotiation Dinner

A week later, on Friday, January 7th, Levin visits Case's sprawling Virginia home in a desperate attempt to salvage the merger. The dinner is tense, filled with polite small talk masking the underlying conflict over the stock division.

Steve Case: "We're not going down to 50%. Even if I wanted to, which I don't, I can't sell that to my stockholders."
– Steve Case [Timestamp]

Despite Levin's efforts, Case remains steadfast, emphasizing the volatility of the dot-com bubble and the necessity of securing AOL's future against a potential market crash.

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4. The Boardroom Shock

On January 7th, at Time Warner's headquarters in Manhattan, senior executives are blindsided by the sudden announcement of the merger. Chris Bogart, Time Warner's general counsel, reveals the merger details, leaving the executives reeling.

“We've agreed to a merger with America Online. That's the good news. The bad news is you're all sequestered here until Monday.”
– Chris Bogart [Timestamp]

The executives grapple with the surprise, questioning the strategic fit and the speed at which the merger is unfolding.

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5. Overcoming Internal Resistance

By Sunday, January 9th, Levin faces further obstacles as Steve Case demands a more influential role within the merged entity. A heated confrontation ensues, highlighting the power struggle between the two CEOs.

Steve Case: "Jerry, if you cannot accept me having an operational role, then the deal is off."
– Steve Case [09:58]

Despite the tension, Levin asserts control over Time Warner's board, ensuring Turner Broadcasting's eventual support for the merger after a grueling seven-hour meeting.

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6. The Grand Announcement and Market Hype

On Monday, January 10th, the merger is officially announced amidst fanfare and soaring stock prices. Levin adopts a Silicon Valley-esque appearance to symbolize the merger's innovative aspirations, while Case exudes raw excitement.

Steve Case: "AOL Time Warner will be the first global media and communications company of the Internet century."
– Jerry Levin [Timestamp]

The market responds enthusiastically, with the NASDAQ experiencing unprecedented gains and analysts speculating on potential future mergers and acquisitions, painting AOL Time Warner as an unstoppable force.

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7. Regulatory Challenges and Lobbyist Opposition

However, the honeymoon period is short-lived. By June 5, 2000, lobbyist Preston Padden spearheads opposition against the merger, arguing that AOL Time Warner's dominance could stifle competition and consumer choice.

Preston Padden: "The marriage of AOL's virtual walled garden and Time Warner's control of the cable pipeline into everyone's home, that will be a deadly combination for consumer choice."
– Preston Padden [Timestamp]

This galvanizes opposition from major players like Disney, NBC, Microsoft, and various consumer advocacy groups, setting the stage for a protracted regulatory battle.

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8. The Dot-Com Bubble Burst and Financial Strain

As the dot-com boom reaches its zenith, the stock market, particularly the NASDAQ, experiences a meteoric rise, crossing the 5,000-point mark. However, this surge is unsustainable, and fears of rising interest rates and unfulfilled tech promises lead to a sharp decline.

By September 27, 2000, AOL's stock plummets by over 20%, forcing the company to scramble to meet its ad revenue targets to sustain the merger.

Jerry Levin: "It's described as nothing short of breathtaking, a points drop never before seen on the US Markets."
– Jerry Levin [21:10]

This financial instability casts a shadow over the merger, with Time Warner shareholders growing uneasy about their investment.

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9. Desperate Measures and Ethical Quandaries

In a bid to bolster AOL's faltering finances, the business affairs team engages in questionable tactics. They manipulate ad buys by inundating AOL's portal with unsolicited greyhound racing advertisements from Wembley plc, misleading investors about the company's performance.

David Brown: "AOL's massaging the numbers and misleading investors about how well it's doing, turning a legal settlement into a last-minute ad buy."
– David Brown [Timestamp]

This act of desperation underscores the lengths to which AOL was willing to go to maintain the illusion of growth, further straining the already volatile merger.

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10. Cultural Clashes and Internal Conflicts

As October 2000 approaches, the cultural differences between AOL and Time Warner become starkly apparent. The aggressive, high-pressure sales tactics of AOL clash with Time Warner's more measured and strategic approach, leading to internal friction.

A crucial dinner with Hasbro executives epitomizes this discord. AOL executive Neil Davis's confrontational style starkly contrasts with Time Warner's collaborative approach, resulting in a failed deal and highlighting the irreconcilable differences between the two companies.

David Brown: "One is fire, the other is ice. And when this merger finally comes to pass, only one side can prevail."
– David Brown [Timestamp]

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11. The Brink of Collapse

By early October 2000, with AOL's stock at its lowest and regulatory approvals still pending, the merger teeters on collapse. The prolonged negotiations have eroded investor confidence, and the once-promising alliance seems destined for failure.

David Brown: "But it's no longer about the long term. It's about saving the merger at all costs."
– David Brown [Timestamp]

Both CEOs, Case and Levin, find themselves under immense pressure to secure the merger before the financial and regulatory challenges prove insurmountable.

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12. Conclusion and Future Outlook

As the episode draws to a close, the merger remains in limbo, reflecting the broader instability of the dot-com era. The internal power struggles, combined with external opposition and financial turmoil, set the stage for the eventual unraveling of what was once hailed as the pinnacle of corporate mergers.

“Now that AOL has crossed that line, the idea of crossing it again and again feels far less daunting.”
– David Brown [Timestamp]

The episode leaves listeners on a cliffhanger, promising further exploration of the internal battles and the eventual collapse in the next installment.

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Notable Quotes

• Steve Case: "We're not going down to 50%. Even if I wanted to, which I don't, I can't sell that to my stockholders."
  – [Timestamp Unknown]

• Preston Padden: "The marriage of AOL's virtual walled garden and Time Warner's control of the cable pipeline into everyone's home, that will be a deadly combination for consumer choice."
  – [Timestamp Unknown]

• Jerry Levin: "It's described as nothing short of breathtaking, a points drop never before seen on the US Markets."
  – [21:10]

• David Brown: "AOL's massaging the numbers and misleading investors about how well it's doing, turning a legal settlement into a last-minute ad buy."
  – [Timestamp Unknown]

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Final Thoughts

This episode of Business Wars serves as a cautionary tale about the perils of unchecked ambition, cultural incompatibility, and the volatile nature of the tech-driven market. Through detailed storytelling and insightful analysis, David Brown captures the rise and fall of the AOL-Time Warner merger, offering listeners a comprehensive understanding of one of business history’s most significant disasters.

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Experience more episodes of Business Wars on the Wondery App or wherever you get your podcasts.

Transcript

[David Brown]

Wondery subscribers can binge all episodes of Business the AOL Time Warner Disaster early and ad free. Right now, join Wondery plus in the Wondery app or on Apple podcasts. New Year's eve, the year 2000. At his gated home in Vermont, Time Warner CEO Jerry Levin sits alone, watching CNN. Eight days ago, merger talks between AOL and Time Warner stalled. But he's been unable to stop thinking about AOL ever since. The talks broke down over how much stock in the merged company would go to AOL shareholders. AOL CEO Steve Case demanded 60%. Levin insisted it had to be 50%. The disagreement proved to be a deal breaker. Now Levin's regretting his decision. Merging with AOL could turn Time Warner From a 20th century media business into a 21st century one. With AOL, it could challenge not just other media companies, but Microsoft and ATT too. And he's about to throw that opportunity away. One week later, Levin enters Case's suburban home in McLean, Virginia. The place is huge, but seems lacking in personality. Case leads him into the dining room. There, they make strained small talk over a meal brought to them by servants. Both men know there's not much to talk about. Only one thing matters. Can they overcome the roadblock to the merger? After the main course, they stop dancing around the issue. Steve, we both want to find a way through this. Let's keep trying. We're not going down to 50%. Even if I wanted to, which I don't, I can't sell that to my stockholders. I can't go to 60%. Your stock price is full of fluff. You know that. Time Warner is the company bringing the real value here. I disagree with that. But look, we're going around in circles. You know my position and my assumption is you didn't fly down here just for a meal. No, I did not. Look, here's what I'm thinking. Let's split the difference. AOL stockholders get 55%. Time Warner's 45. It needs to be 60. It's never going to be 60. Come on. Is losing this merger really worth 5%? I could say the same to you. I've already moved. Your turn. Case pauses to think. AOL needs this deal. Case is sure that the dot com hype will soon burn out. And when that happens, AOL's stock price will fall off a cliff. This deal will protect AOL from that crash. Case nods, then smiles. Fine. 55. 45. The last roadblock is gone. The biggest merger in US corporate history is on, and it's going to be a sensation right up until it's not.

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[David Brown]

[e-mail] after telling hundreds of stories about business battles throughout history, I've learned one constant truth. Having the right support systems in place can make or break a new venture. Trust me, it was a battle even I faced on my business journey. That's why AT&T business makes so much sense for entrepreneurs today. When you're building something from scratch, or even just at the point where you're ready to grow, you need a provider that makes things easy. With AT&T business, you you can have reliable, protected Internet connection you can count on, so you do not miss a beat. Building your dream might take time and a lot of work, but that doesn't mean it can't be a little easier. Wake up to the power of ATT business and turn your vision into reality. Business.att.com From Wondery I'm David Brown and this is Business Wars. On the last episode, AOL became the hottest stock of the 1990s, rising nearly 80,000%. But now CEO Steve Case spears investor excitement about the Internet will burn out. So he's making an epic play to protect AOL against that day by buying the world's biggest media company, Time Warner. This is episode two, the Deal of the Century. Friday, January 7th, the day after Levin and Case met in Virginia. 75 Rockefeller Plaza, Manhattan. It's 10am and Time Warner senior executives are heading to the conference room on the 28th floor of the company's headquarters. First thing this morning, they got an email informing them of this must attend meeting. As they arrive, they're all trying to guess what's about to be announced. Maybe Ted Turner stepping down. It's about time. It's not like he has anything to do with anything these days. You think you sell his stock? Hope not. I don't need anything messing with my 401k just before I retire. The room hushes as Time Warner's general counsel, Chris Bogart enters the room and addresses the team. We've agreed to a merger with America Online. That's the good news. There's stunned silence. None of them had any idea a merger was in the cards, let alone agreed. Bogart ignores the obvious shock on the executive's Faces. The bad news is you're all sequestered here until Monday. We've got three days to put this deal together and until we do, you can't tell a soul what's going on. Not even your families. The executives are quiet. This is a total curveball. Hey, here's a tip. If you ever get summoned to a last minute meeting, locked in a room and told not to call your spouse, let me tell you something. The power play has started. In deals this big, silence usually means someone's trying to sprint to the finish before anyone asks too many questions. Keep an eye on who knew what when that tells you where the real control sits. And make sure to take some mental notes. After all, someday someone might want to tell the story of how it all went down. For some of the Time Warner executives, this is a slap in the face. Levin didn't think they were important enough to be invited to the talks. Others feel excited at being involved in such a huge merger. But most of them are focused on aol. They're asking why is Time Warner merging with a technology company instead of someone like Disney? Is this good or bad for their retirement plans? Those who work at Time Warner Cable are suspicious. They see AOL as the enemy. Time Warner Cable and other cable TV providers are well placed to deliver broadband to American homes. But rather than investing in laying its own cables, AOL wants the government to give Internet service providers the right to use cable providers infrastructure. But there's little time to dwell on what's about to happen. They've got fewer than three days to do all the due diligence and paperwork they have to do to pull off a deal the likes of which has never been done before. Two days later Sunday, January 9, 2000 just before 2pm in Midtown Manhattan, Time Warner's directors are assembling in a law firm's conference room. On the table are platters of sandwiches and thick briefing packs. Time Warner CEO and chairman Jerry Levin summoned them here to approve the merger with aol. And for most of them this is the first they've heard about it. But Levin's not here. Instead he's in a side office, fuming and waiting for AOL boss Steve Case to answer the phone. A few minutes ago, Levin got word that Case is objecting to Time Warner legal papers that describe him as the non executive chairman of the merged company. Case wants to be an executive chairman. In other words, he won't just oversee the board of directors, he'll also run part of the business. Case picks up the phone. Jerry go Take a jog, Steve. Case isn't surprised by Levin's outburst. His people warned him that Levin's on the warpath. Case allows Levin to keep ranting. You agreed to be a non executive chairman. That was the deal, remember? That was our deal from the very first call you made to me.

[Steve Case]

No, I said I would let you be CEO and that I would be chairman. But an executive chairman?

[David Brown]

You got brass balls on you. You know What? Pulling this 11th hour bull.

[Steve Case]

I'm not pulling anything, Jerry. My position is unchanged. I did not offer to be a non executive chairman. I never would have. I have no intention of limiting my role to organizing board meetings. I'm surprised you ever thought I would.

[David Brown]

What you're doing here is low, Steve. Real low.

[Steve Case]

Jerry, if you cannot accept me having an operational role, then the deal is off.

[David Brown]

Levin says nothing. He doesn't want to share power. But he knows Case well enough by now to know he's not bluffing. Levin's also backed into a corner. Down the hallway, Time Warner's board members are waiting. What's he gonna tell them? That he canceled the biggest merger in history because he can't share power?

[Steve Case]

Jerry, is the deal off?

[David Brown]

Levin grimaces. He's a veteran of Time Inc. And Warner communications merger. Their CEOs agreed to share power too. Instead, an ugly power struggle broke out. But at this point, there's not much he can do. Fine, Steve, fine. Your executive chairman. Happy now? Fresh from the call, Levin heads for the conference room where the board is waiting. They do a double take on seeing him. The trademark bushy mustache he's sported since the 70s is gone. Levin ignores them and begins the meeting. For the next seven hours, Time Warner's directors listen to presentations from lawyers, bankers and executives, all of them selling the merger. Not that Levin's worried about getting them to back it. Levin controls Time Warner's board just like his executives. He keeps them isolated and divided to ensure that they can never mount a challenge to his rule. The only one he can't control is Ted Turner, the founder of the Time Warner division, Turner Broadcasting. Turner Broadcasting runs cable TV networks including Cartoon Network, CNN and tnt. Turner is a multi billionaire and most of his wealth is in Time Warner stock. This merger could add or subtract billions from his fortune. Turner's also unpredictable. The press call him Captain Outrageous because no one's sure what he'll say next. Sometimes he's 100% behind Levin. Other times he rails loudly against him. And today, Turner's not cooperating. And this may be me feeling hurt from my recent divorce. But does tying the knot with AOL make sense? I'm asking myself, is AOL road tested? How sure are we that they've built something that can last? But Levin doesn't care what Turner's got to say. He's got the rest of the board under his thumb. Turner can't stop this merger. At 9pm that evening, after seven hours of talk, the vote is held. And instead of voting against the merger, Turner joins the other directors in voting for it. The rest of the board's support for the deal made Turner dismiss his own doubts. 10am the next day, Monday, January 10th in a 500 seat auditorium in Midtown Manhattan, the news conference announcing the merger of AOL and Time Warner is underway. But it's merely a formality. The news of the $183 billion deal leaked earlier today. It's dominating the headlines on TV, radio and the web. People are already dubbing it the business deal of the century, even though the new century's less than two weeks old. Levin heads on stage looking like a changed man. Not only is his mustache gone, but he's now dressing like an Internet CEO with open necked shirt and khaki pants. You know people dress for success, that's true. But when Levin walked on stage looking like a dot com founder, it didn't change the fact that he was still running a legacy media giant. It's a classic mistake to think that adopting the look of innovation somehow means you're part of it. Optics might move markets in the short term, but they won't fix mismatched business models in the long haul, as we'll soon find out. Levin reaches the podium and addresses the hundreds of people gathered in the auditorium. AOL Time Warner will be the first global media and communications company of the Internet century. But while Levin's gone Silicon Valley Case has gone Wall street by wearing a suit and tie. But despite his button down look, for once his emotions are breaking through. He hugs Levin, then punches the air while grinning ear to ear. Case left Hawaii to make it big, and it doesn't get bigger than this. One reporter tries to rain on the parade with a question for Levin. How can you justify accepting AOL stock as legitimate currency? Isn't it overvalued? Levin backs the question away. The new media stock valuations are real. AOL's valuation is real. Something profound is taking place here. Even Ted Turner's put his doubts aside to help hype the merger. I did it with as much or more excitement and enthusiasm as I did on that night when I first made love some 42 years ago. Yep, Captain Outrageous strikes again. The headlines are going to read, AOL Time Warner is better than sex. And you know what? Wall street seems to agree. That day, the tech focused NASDAQ posts its biggest gain in a single day. Time Warner's Stock jumps almost 40%, adding another $7 billion to Turner's personal fortune. Rival media and tech companies are left shaken. News Corp. Mogul Rupert Murdoch says his media empire feels like a minnow in comparison. Analysts run wild with ideas about what could happen next. Maybe Yahoo could acquire Disney. Might Microsoft and Viacom join forces? Could AOL Time Warner buy Walmart? For that dazzling moment in January 2000, AOL Time Warner looked unstoppable. The kind of company that will set the cultural weather for the next hundred years. After all, it owns AOL, the world's leading Internet service with 30 million subscribers. It also owns the number two cable system in the U.S. the most popular instant messaging service and the leading magazine publisher, Time Inc. Then there's the movie studios, Warner Bros. And New Line. The TV networks, hbo, Cartoon Networks, CNN and tnt. And wait, there's more. DC Comics, Warner Books, Warner Music, even the Atlanta Braves. It's a mega company. One that Case and his team believe could leapfrog Microsoft to become the world's most valuable company. But before that can happen, the merger needs to be approved by government regulators. That won't be easy with a merger this big and high profile. And one thing is for sure, AOL and Time Warner's competitors are already heading to Washington, D.C. on a mission to persuade the federal government to strangle this mega merger with red tape.

[Jerry Levin]

Hear that? That's the sound of Cinnamon Toast Crunch telling us it's crunch time as we gear up for another year of serial training camp. Last year, a dynamic brother duo competed and won the right to make their very own cereal. They named it the Kelce Mix. This summer, the energy is being brought straight from the end zone to the breakfast aisle. With three cereal loving wide receivers. Justin Jefferson, Amon RA St Brown and ja' Marr Chase. You can find these football stars on limited edition cereal boxes of Cinnamon Toast Crunch, Lucky Charms, Honey Nut Cheerios and Reese's Puff Cereal starting in August. And don't miss out on Justin Jefferson's Jetta's Mix, a fruity fusion of Frosted Lemon Cheerios and Cinnamon Toast Crunch Strawberry. For a limited time only, be sure to score them all where every bite tastes like a touchdown.

[Mike Corey]

Hey, I'm Mike Corey, the host of Wondery's podcast Against the Odds. In each episode, we share thrilling true stories of survival, putting you in the shoes of the people who live to tell the tale. And sometimes we get to hear from survivors themselves in their own words on our next season it's May 2023. Competitive swimmer Ali Truitt has just graduated from Yale and completed her first marathon. But a few days after graduation, Allie is snorkeling in the Caribbean when suddenly she's attacked by a shark and finds herself in a fight for her life. Ali's epic journey to reclaim her love of the water pushes her further than she could have ever imagined, all the way to the Paris Paralympics. Follow against the odds on the Wondery app or wherever you get your podcasts. Binge the entire season ad free right now only on Wondery Plus. Start your free trial in the Wondery app, Apple Podcasts or Spotify.

[David Brown]

Foreign 2002 months since AOL and Time Warner announced their merger on the Nasdaq Stock Exchange, the dot com boom is, well, booming. Four months ago, the tech heavy index passed the 3,000 points marker. Two months ago, it vaulted past 4,000 points. Today, it surged past a new milestone, 5,000 points. AOL shares may have tumbled on news of its merger with a slower growing Time Warner, but the investor frenzy around tech stocks continues. Market watchers predict the Nasdaq will break the 6,000 barrier within a year. In comparison, the returns from the Dow Jones Industrial Index look dowdy. But the next day, the bubble bursts, popped by fear of rising interest rates and the increasing improbability of the tech companies ever making good on their outlandish promises. The fall is swift and brutal. Over the next month, the Nasdaq loses one third of its value.

[Jerry Levin]

It's described as nothing short of breathtaking, a points drop never before seen on the US Markets. This closing bell might as well have been an alarm.

[David Brown]

So savage was the selling Former hot stocks like the online retailers Pets.com and eToys are sent tumbling towards bankruptcy. Amazon is left fighting for survival. For AOL chief Steve Case, the crash is vindication of his plan to buy Time Warner. The market punished AOL for its plan to admit attach itself to the slow growing but asset rich media giant. Since the merger announcement, AOL shares are down by a third. But now that strategy looks like genius. Case bought Time Warner with stock that's losing value fast, and the terms of the merger deal means Time Warner can't walk away without paying billions in compensation. Not that Time Warner wants to call the engagement off. In June, its shareholders vote overwhelmingly in support of merging with AOL. Only 1% of Time Warner stockholders vote against it. AOL stockholders feel just as positive about the deal, with 97% of them also backing the merger. Having won over the stockholders, there's just one hurdle left. The regulators to merge AOL and Time Warner need the thumbs up from three regulators, two in the U.S. one in Europe. First, there's the Federal Trade Commission, the ftc. Its mission is to ensure powerful companies don't undermine free competition. Next is the Federal Communications Commission, AKA the fcc. It regulates communications in the media. It will want assurances that AOL Time Warner won't stifle other providers of cable TV or Internet services. Finally, there's the European Commission, which will check if the merger will hurt competition on the other side of the Atlantic. Its primary concern is that AOL Time Warner could dominate the online music business. It's already set to be a grueling fight. The AOL Time Warner merger is so high profile, the regulators will want to show that they're scrutinizing every bit of the deal. But that's not not the only source of trouble, because AOL and Time Warner's foes are about to strike back. June 5, 2000 Washington, D.C. in a law office, a short stroll from the White House, a man wearing a tie covered in images of the Disney character Goofy stands in a plush conference room. His name is Preston Padden, and he is Disney's chief lobbyist. He's a D.C. power player, and he's out to mobilize opposition to the merger of AOL and Time Warner. Despite his Goofy tie, he's anything but. He's slick, relentless and determined to disrupt the deal of the century. Around the conference table, munching cookies and guzzling Coca Cola, are lobbyists from corporations and nonprofits he hopes will join the fight. They include representatives from NBC and cable TV company USA Networks. From the technology sector, there are folks from Microsoft and the nation's second largest Internet service provider, earthlink. There's also representation from the campaign group the center for Media Education. And they've all got a beef with AOL Time Warner. Padden fiddles with his tie, then welcomes his guests. Thank you all for coming today. I can only speak for Disney here, but we see the AOL Time Warner merger as a competitive threat, and we're concerned. Patton's guests are not surprised. The rivalry between Disney and Time Warner has been getting ugly. Last month, arguments about how much Time Warner Cable would pay to carry Disney's TV networks went nuclear. Time Warner briefly yanked ABC from its cable TV services, leaving millions of people without access to the Disney owned TV network. The way Disney sees it, that's just an early taste of how AOL Time Warner might use its market strength in the future. And so it's now out to get regulators to impose restrictions on its powers. Padden knows the organizations in this room also feel nervous about AOL Time Warner. He just needs to get them fired up to join Disney's fight. He starts his rallying call. AOL is the gatekeeper to the Internet. It is building a virtual wall to keep its many millions of users within its proprietary online service. It doesn't want them using the World Wide Web. It wants people to stay on its portal because that's how it makes its money, from selling ads. It wants people to think AOL's Walled Garden is the Web. You know, Patton's not wrong. AOL's revenue from advertisers depends on its ability to control what people see on its online portal. So while AOL users can browse the web, the company encourages them to stay on its own portal, the one it began building back in the 1980s. It's not all that different to how Facebook, YouTube and TikTok work. Social media companies don't want people leaving their websites. They want them to stay on their platform so they see the ads and promotions advertisers pay for. It's why social media sites often deprioritize posts that include external links. Padden eyes the lobbyists he's invited to his meeting and underscores his message with an example. Last Christmas, we put the Disney store online inside AOL's walled garden. But they made us get rid of all the links to websites that were not inside that garden. Well, the marriage of AOL's virtual walled garden and Time Warner's control of the cable pipeline into everyone's home, that will be a deadly combination for consumer choice. And that's why I asked you all here today. We want to see how others feel about this merger and see whether we can do something together about it. By now, the lobbyists in the room are nodding along. They've all got something to fear from AOL Time Warner. And they're ready to step up and use their influence to encourage the regulators to take a hard line on the merger. In the weeks that follow, corporate warfare erupts on Capitol Hill. Anti merger lobbyists advance whining, dining and smooth talking politicos and officials. In response, Time Warner and AOL send in their own Influencers to mount the counteroffensive. As the summer continues, the anti merger alliance grows in strength. Telecom giants AT&T, Bell south and Verizon join the fight, as do the American Civil Liberties Union and Consumers Union, the publisher of Consumer Reports magazine. Small, local Internet service providers providers trek to Washington urging their representatives to do what they can to stop AOL Time Warner from destroying their businesses. None of those opposing the merger actually expect to stop it from happening. AOL and Time Warner's businesses are distinct. Instead, the anti merger lobby hopes to make enough noise and apply enough pressure to get regulators to impose conditions that will keep AOL Time Warner in check. And the biggest flashpoint in the fight is broadband. Ever since home computers arrived, people have gone online using dial up connections. They plug their computer into their landline phone socket. Then it calls the number of AOL or another service provider. After a few shrill beeps and hisses of white noise, they're online. But dial up connections are limited. Regular phone cables can't handle a lot of data. This makes dial up Internet slow, especially if you do two things at once, like downloading a file while also browsing the Web. And those slow speeds were a major barrier to audio, images, games and video being delivered online. Luckily, help is on its way in the form of high speed broadband delivered through cables that can carry way more data. Cables like those that pipe cable TV into people's homes. But after the merger, AOL Time Warner will control both the nation's top Internet provider and the second largest cable TV provider, which raises the question of who will be able to offer broadband services using its cables. The fear is that the merged company will only allow AOL to do that, a move that would mean millions of people would have no choice but to sign up with AOL if they wanted broadband. It's August 2000, and inside the Federal Trade Commission in Washington, D.C. aOL and Time Warner are on the defensive. The antitrust regulator wants guarantees that AOL's rivals will also get to offer their services on Time Warner cable systems after the merger. It's a proposal that's not going over well with AOL's outside counsel, Joe Sims. He slams his palms on the table and leans his body forward, eyes glaring at the FTC's chief negotiator. Now we have already pledged that we'll make Time Warner's cable lines open to AOL's competitors. The FTC chief negotiator, Richard Parker, scowls. The pledge is short of a promise, and we want a guarantee. We have to be sure. We also need guarantees of open access for interactive TV services. Simms eyes widen. Interactive tv? You're crazy. That doesn't even make sense. Interactive TV doesn't even exist. We're looking to win. It does companies like Disney. Aha. Yeah, Disney. I should have known. Parker pitches his body forward, closing the gap between him and Sims. Their eyes lock as the two go hammer and tongs at each other. AOL's general counsel Paul Capucho starts to worry. AOL Time Warner doesn't want to spend years in court trying to get this merger over the line. Capuchio needs to find a way to dial down the heat. He glances at his leather briefcase. It's resting on the floor next to his feet. Then he smiles. Capuchio picks up the case and flips it open. Amid all the legal documents is a toy, a doll with a shrunken head and wild hair reminiscent of Warner Bros. Looney Tunes character the Tasmanian Devil. He grabs it, then shoves his arm out right in between the two arguing men. They stop mid sentence and stare as Cappuccio waves it in their faces. FTC negotiator Parker blinks, then starts laughing. The argument's forgotten. The negotiations can resume. But while the tensions dial down, the gulf between AOL Time Warner and the FTC remains. And until one backs down, this merger is stuck in limbo. And that's a problem, because with tech stocks in meltdown, the feeling is growing with every passing day that AOLs paid for time Warner with little more than magic beans. And Time Warner CEO Jerry Levin's best move now might be to call the wedding off.

[Lindsey Graham]

In 1992, federal agents surrounded a remote cabin in the mountains of Idaho. It belonged to Randy Weaver, a Christian survivalist with links to the far right. Weaver was wanted on a minor weapons charge, but a series of blunders and misunderstandings turned the situation into an armed and deadly standoff. Hi, I'm Lindsey Graham, the host of Wondry show American Scandal. We bring to life some of the biggest controversies in U.S. history presidential lies, environmental disasters, and corporate fraud. In our latest series, a family of religious fanatics moves to Ruby Ridge in northern Idaho to wait out the apocalypse. But their paranoia and suspicion of authority lead to a confrontation with federal law enforcement and their own personal Armageddon. Follow American Scandal on the Wondery App or wherever you get your podcasts. Experience all episodes ad free and be the first to binge newest seasons only on Wondery Plus. You can join Wondery plus in the Wondery App, Apple Podcasts, or Spotify Start your free trial today.

[Mindy Thomas]

Today is the worst day of Abby's life. The 17 year old cradles her newborn son in her arms.

[David Brown]

They all saw much I loved him.

[Mindy Thomas]

They didn't have to take him from me. Between 1945 and the early 1970s, families shipped their pregnant teenage daughters to maternity homes and forced them to secretly place their babies for adoption in hidden corners across America. It's still happening.

[David Brown]

My parents had me locked up in the godparent home against my will. They worked with them to manipulate me and to steal my son away from me.

[Mindy Thomas]

The godparent home is the brainchild of controversial preacher Jerry Falwell, the father of the modern evangelical rite and the first founder of Liberty University, where powerful men emboldened by their faith determine who gets to be a parent and who must give their child away. Follow Liberty Lost on the Wondery app or wherever you get your podcasts.

[David Brown]

It's September 27, 2000, and at AOL's head office in Dulles, Virginia, the end of the quarter is near. And that's got the business affairs team worried. When the merger with Time Warner was announced, AOL stock traded at more than $70. Now it's hovering just above 55. That's over a 20% decline, and that's a problem. The merger deal was agreed based on AOL's share price before the bottom fell out of tech stocks. And the lower AOL stock sinks, the more investors wonder if Time Warner might be wiser to abandon the merger. So far, Time Warner boss Jerry Levin has dismissed that idea and reiterated his commitment to the merger. But AOL chief Steve Case is worried all the same. He knows that if Wall street senses weakness at aol, there will be a sell off of its stock. And the lower that price gets, the more pressure there will be on Levin to rethink. Sometimes stock price isn't just a valuation, it's ammunition. In a stock for stock deal, every dollar your shares drop weakens your negotiating hand. Case knew it. It's why he moved to do the deal while AOL stock was flying high. When your stock is your currency, perception becomes reality in real time. And that's why Case now needs to prop up the price long enough to close this deal. Case pushes AOL's ad sales team to do all they can to ensure that the company's quarterly numbers meet Wall Street's lofty expectations. He thought the merger would be complete by now, but the negotiations with regulators are dragging on. But at this moment, with just three days until the third quarter ends, AOL looks set to fall short of expectations. So the business affairs team springs into action. The team is young, aggressive and driven. They know this is a crisis, one with the potential to derail the merger. Three days to fill the hole in AOL's ad revenue goal. They search for options and then someone in AOL tips them off about Wembley plc. Wembley is a British gambling business with interests in greyhound and horse racing. And all the way back in the pre web days of 1992, AOL and Wembley got into a legal fight. The particulars don't matter much here. What matters is that Wembley settled and agreed to pay AOL nearly $27 million. And it's not yet paid. So one of the AOL business affairs team members calls Wembley and offers them a deal. AOL will cut the amount it owes by $3 million if they agree to spend the rest on online ads. Wembley takes the deal not just because of the savings, but because it's about to launch a greyhound racing website, which it will need to advertise. But AOL's not out of the woods yet. If AOL is to include this money in its third quarter results, the ads have to run before the end of September and Wembley's website isn't ready. So it's in no rush to get the ads out. So the AOL team get creative. Without telling Wembley, they copy the artwork from its greyhounds website and use them to create a bunch of online ads. Then they flood AOL with more than $20 million of greyhound racing ads. Users log in to find AOL infested with greyhounds. Everywhere they go on the portal, there are greyhounds staring back at them. Meanwhile, in its head office in London, Wembley's tech team are left scrambling to cope with the avalanche of online traffic to a website they've not even started promoting yet. But at AOL head office, it's party time. The business affairs team are high fiving and dancing to the hip hop hit who Let the dogs out. AOL's going to deliver yet another set of impressive numbers. It's enough to keep the merger from derailing. But now AOL's massaging the numbers and misleading investors about how well it's doing, turning a legal settlement into a last minute ad buy. That's the kind of creativity that smells a bit like desperation, don't you think? AOL was selling ads. It was jamming invoices into the calendar to hit a target. Sure, the numbers look good for a quarter, but if you're just putting off the inevitable crash, well, that's why founders need to build honest momentum, not magical math. And now that AOL has crossed that line, the idea of crossing it again and again feels far less daunting. But while AOL's business affairs team conjures sales out of nowhere, the architects of the merger are getting angsty. Aol, Steve Case and Time Warner's Jerry Levin are growing worried about how long it's taking to reach a deal with the regulators. Every day brings more bad news for Internet stocks. In October 2000, AOL's stock price sinks to its lowest level in a year, a situation that adds to the growing impression that Levin sold Time Warner for the stock market's answer to fool's gold. So Case and Levin order their attorneys to get an agreement done with the regulators fast. If that means agreeing to open up Time Warner cable systems to competitors, well, so be it. It's no longer about the long term. It's about saving the merger at all costs. And it can't happen soon enough. It's early October 2000, and in the fifth floor boardroom at AOL's head office, AD chief Meyer Burlo is trying to let Case and the company's other directors down gently. He runs through slide after slide, bar charts and graphs flip by, all designed to let the board members feel at ease. And then Burlow slips in the most important piece of information he has to share. Growth in ad revenue will slow slightly. Bob Pittman, the former Time Warner executive turned AOL president, springs up in his seat and demands to know if the company will reach its 2001 ad revenue target of $2.7 billion. Burlow's hesitation says it all. He tries to duck the company question. Pittman won't let it go. Burlow finally gives up the evasion. 2.7 is unlikely. 2.4 billion is realistic. But it's going to be really hard to get there. The ad market is plunging. The tech startups that used to spend big on AOL ads are no longer flush from venture capital, investment and initial public offerings. And it gets worse. So many of these companies are falling down, it's possible that $140 million of booked ad revenue won't get paid. Pittman and the board members fall silent. Time is running out to get the merger done before AOL has to fess up to the reality that its breakneck growth is fizzling out. But while the bosses fret about getting the merger over the line, lower down the chain of command, preparations for the coming together of the two companies is already well underway late 2000 New York in Morton's Steakhouse, AOL ad executive Neil Davis cuts into his medium rare New York strip. He's here shadowing two sales executives from Time Warner at a crucial dinner with Allen Hassenfeld, the boss of toy giant Hasbro. The Time Warner duo have told Davis to be understated and let them run the meeting. He's here to learn how Time Warner does it, not to take control. But that's just not Davis's style. Like the rest of the AOL sales team, he's used to selling hard and pushing deals over the line. And that's left him itching to butt in and split. Speed up this go slow sales approach. One of the Time Warner executives continues with a pitch. What we have in mind is a positive feedback loop. You make the toys based on our characters. The toys come with pre programmed phrases, but kids can go on to AOL and download new ones. Hassenfeld, who's wearing a black shirt and pink tie, nods. That's interesting. AOL would also offer games based on the characters. So the toys encourage kids to go to aol. AOL encourages kids to engage with the characters and buy the toys. Hmm. What do you think? Davis's composure snaps. This sales pitch needs more pep. He looks up from his stake and at Hassenfeld point is everyone wins. Davis notices a look of concern flash on the faces of the Time Warner executives. But the chance to secure one of the first big of the AOL Time Warner merger spurs him on. He locks eyes with Hassenfeld while gesticulating with his steak knife in his hand. Alan, come on. Here's the choice you've got. Either you pass on this deal and let Mattel win it, or you do what we do at AOL to competitors. And what do you do to them at aol? Davis leans closer. We drive a knife into their heart. Davis slams down the stairs, steak knife hard. Its point embeds into the table. The stunned Time Warner executives stare open mouthed at the quivering knife. The entire restaurant turns to look. A smile creeps onto Hassenfeld's face. I agree. Davis thinks this is a slam dunk. But Hasbro ends up turning down the deal for the two Time Warner executives. This is a warning that the folks from AOL are not like them. They are not into persuasion over relaxed meals. They are out to win and they don't take prisoners. It's clear the two companies styles don't gel. One is fire, the other is ice. And when this merger finally comes to pass, only one side can prevail. On the next episode, internal warfare breaks out within AOL Time Warner. Steve Case and Jerry Levin battle for the company's soul, and AOL's fudged accounts get exposed. From Wondery this is episode two of the AOL Time Warner disaster for Business Wars. We've used lots of sources for this season, including Stealing Time by Alec Cline, Fools Rush in by Nina Monk, and the Third Wave by Steve Case. Quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said at the time. These scenes are dramatizations, but they're based on historical research. I'm your host, David Brown. Tristan Donovan of Yellowant wrote this story. Sound designed by Josh Morales. Kyle Randall is our lead sound designer. Fact Checking by Gabrielle Drollett. Our managing producer is Desi Blalot. Our senior managing producer is Callum Plews. Produced by Tristan Donovan of Yellowant and Kate Young. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louie for wondering.

[Guy Raz]

Hey grown ups. I'm Mindy Thomas.

[David Brown]

And I'm Guy Raz and we're the.

[Guy Raz]

Host of the number one podcast for curious kids. Wow in the World.

[David Brown]

Ah, Mindy. Can you believe we have our very own wow in the World Stem Toys?

[Guy Raz]

I totally can't believe it. Guy Raz. Eight years ago when we started making wow in the World, we were on a mission to spread the latest WOW discoveries in science and technology and innovation. And now we get to help kids discover these wows right at home.

[David Brown]

That's right. From the ultimate high flying air rocket to the light up terrarium, there's something for every Wowzer in your world to play and tinker with grownups.

[Guy Raz]

You can find wow in the World Stem Toys available now at select Walmart locations or [e-mail]. shop the WOW Now.