AOL Time Warner Marches On!

For nearly a decade, a somber oil portrait of Time magazine co-founder Henry Luce stood watch in the corner of an executive meeting room on the 34th floor of the Time Life building in Rockefeller Center. Painted by Constantine Alajálov–one of the avant-garde illustrators whose work had been featured in some of the first issues of Fortune, another one of Luce’s magazines–it depicted the Time co-founder in his thin-haired later years, dressed in a suit, placed against a dark background. “It wasn’t a very good painting,” confided one Time Inc. executive.

But like a lot of people and things in the Time Life empire, the painting–given to the magazine in 1992 by Reader’s Diges t, which had commissioned it 20 years previously for a profile of Luce–had taken on a certain acceptable, dignified, graying permanence as it hung there, dusting, on an easel, overseeing the empire that Luce could hardly have imagined.

And then one day– poof! –the painting was gone. And Time employees looked at the empty corner and wondered why.

The painting of Luce, as it turned out, hadn’t been stolen. It hadn’t been sold. It hadn’t mysteriously vanished, the ghostly handiwork of Luce’s late Yale classmate and Time co-founder, Briton Hadden.

No, the portrait had found a new home, suddenly appropriated by … Steve Case, the former CEO of America Online, the new master of the reconfigured media empire rechristened as AOL Time Warner.

Had Mr. Case, like many conquerors, taken to sacking the old temples, hoping to commune with the presences of his predecessors? Was his removal of Luce’s painting a sign of a siege–and a hint of things to come?

“I asked that the Henry Luce portrait be loaned to my office for three symbolic reasons,” the AOL Time Warner chairman e-mailed Off the Record. “The first is that although I’m perceived to be an Internet/digital guy, I love magazines and wanted everybody to know that from my perspective, magazines would play a central role in the future of AOL Time Warner.

“The second is that Henry Luce is, like Jack Warner or Ted Turner and so many others, a great innovator and a key part of our company’s tremendous legacy of innovation.

“And the third, and most important, is that I have long believed that Henry Luce had it right when he said that corporations must be run not just for shareholders but also in the public interest–and I wanted people to know that I embraced that perspective.”

It was an e-mouthful, this missive, and clearly this painting wasn’t just a painting. For more than a year, Mr. Case had been under careful watch–from fellow executives, from shareholders, from employees, from the media, from everyone, it seemed–as he struggled to define what would become of Luce’s defining publications of the American Century when they reached the next century.

As when Time Inc. merged with Warner, there was an immediate culture clash to be addressed: then it had been Old Time Inc. vs., New Steve Ross; Time vs. Batman ; now it was history, hard copy, establishment, what existed vs. the Future. The contrast was sharp and wide. Time Inc. was aging and well-educated and laid back and necktied. AOL, by comparison, was lean, sprightly, and played hard and sensibly, open-necked and hard-nosed. As a company, it was narrowly focused and didn’t value a Rhodes scholarship during working hours.

Twelve months and one day after the merger announcement, the deal between AOL and Time Warner had finalized, ducking regulatory concerns over a brewing monopoly. But even with a year of getting-to-know-you time, a rift between old and new remained. The new partner was quick to scuttle impressions of Time Inc. as comfy editorial paradise–the closing-night bar cart was long since gone, of course, but the free juice, soda and pretzels, perks actually instituted in response to the real good old days at Time Inc. when office parties abounded, when tweedy men and long-skirted women smoked and drank , were junked, too.

AOL culture, it is clear, isn’t exactly jibing with the Time Inc. way of life. Cultural differences even more subtle: Both Time Inc. and AOL scorn neckwear in this day and age, except to visit each other, as was clear from the beginning of the merger, when Time Warner CEO Mr. Levin showed his Adam’s Apple to the TV cameras. Expecting, but failing, to find Timemen with ties, AOL scouts show up in New York in suits; likewise when traveling to tie-less AOL headquarters in Dulles, Time editors pull out their suits.

As executive decision makers, AOL’s brass was centralized, and therefore, faster on its corporate feet. By comparison, the decentralized Time Inc. was a bureaucratic thicket and a plodder. Under Mr. Case, the whole enterprise would be centralized, and that was a heady endeavor, but slowly, the Time Inc. crowd had started to be convinced it could work.

The immediate force driving a culture change at Time Inc. is the budget-cutting spree Time Inc. CEO Don Logan has ordered up. The causes are twofold. First, there is of course the collapsing advertising market. Like any publisher, Time Inc. is seeing its ad pages plummet. But there is something else: proving to the conquering AOL crew that New York can be as lean as Virginia. The most major trimming are the staff reductions in the form of early retirement offers to employees over 50-years-old who’ve been with Time Inc. for 15 sequential years. Other voluntary severance packages are being offered or considered by individual magazines.

But, word is that no expenditure is escaping corporate scrutiny at Time Inc. this year and that’s leading to a crackdown on some of the things that make working at Time Inc., well, working for Time.

For one, there’s the pizza cutback at Sports Illustrated –going from 14 to nine pizzas per closing night will apparently save $2,500 a year. And at People , there will be no more People writers taking other People writers out to lunch on the company. At Time , the long-standing but unenforced rule that its writers cannot expense more than $25 per person at lunches with other Time writers is being enforced, which is a long way from the days when Life magazine photographers were on a par with movie stars and baseball stars when they visited foreign countries. Also at Time , no more catered dinner on Wednesday–only Thursday and Friday. And there’s vending machines where the fridges with Evian and Cokes were. (The Time staff must drink a lot of Diet Coke, as the vending machines are theoretically going to save Time Inc. nearly $100,000 a year.)

As for the missing Luce, Time Inc. editor-in-chief Norm Pearlstine didn’t seem to mind the portrait of the patriarch being abducted from the 34th floor. “I’m delighted with the idea that Steve wants it in his office,” Mr. Pearlstine said. “It’s certainly consistent with his comments and his style of operating since coming to AOL Time Warner in New York. He certainly is cognizant of the influence of Henry Luce on Time Inc.–and, by extension, on Time Warner and AOL Time Warner.”

Can Mr. Case step into Luce’s shoes? Luce family friend, essayist and Clare Boothe Luce memoirist Wilfrid Sheed said Luce would have been fascinated by Steve Case. “He was endlessly curious and would have been very, very interested in being online in some way,” Mr. Sheed said.

“My guess is that Luce, who thought of himself as the creator of a new form of communication, would be quite interested in Steve Case,” said Alan Brinkley, a professor of history at Columbia University who is currently working on a biography of Henry Luce. “Whether he would like the idea of Case presiding over his own company, I can’t say.”

But perhaps there was more than a passing similarity between the old man on the wall and the new man in charge. Asked which side Henry Luce might identify with in the new AOL Time Warner, Mr. Brinkley offered this: “He would have been more of the AOL style. There were no independent fiefdoms in Time Inc. when Luce was running it. He ran everything–at least in theory, but often in practice. I think the AOL model would be more his model.”

You say bomb fear? I say cold beer. Panic ripped through the offices of Fairchild Publications on April 10 as the close-quartered staffs of W , WWD , Details , Jane , and Footwear News , among others, were evacuated after a bomb threat. The baseless fright ground the fashion-trade empire to a halt, and prevented messengers bearing Prada bags from delivering their prizes.

Staffers were jolted out of their late-afternoon lulls at around 5 p.m. when word began to spread to evacuate the 7 West 34th Street building. The order was met with some quizzical looks from those who suspected it was a hoax. Yet leave they all did. One person noted that the Footwear News staff–perhaps getting an assist from special cross-trainers?–were the quickest off the blocks and down the stairs first.

Once outside, the entire Fairchild staff, including chief executive Mary Berner (who was seen in heated negotiations with cops, trying to get her staff back inside) and Women’s Wear Daily editor in chief Ed Nardoza milled about on the sidewalk.

But some had a more practical response: A good-sized contingent, our eyewitness source said, headed to the Playwright Herald Square for a pint.

According to a spokeswoman for Fairchild, the ruckus was caused by a bomb threat left on the voice mail of a human resources department staff member. Upon hearing it, someone called the police, and the building was evacuated while a search commenced.

Coincidentally, the incident came just as Fairchild completed its first-ever, corporatewide employee performance reviews, a tedious process that involved each member of the staff’s being evaluated by his or her supervisor.

The NYPD’s bomb squad gave the all-clear by 5:45 p.m. (despite the consternation of one W employee who was worried the third floor had not been checked thoroughly enough).

Not everyone made it back into the building, though. At press time, the contingent drinking it up at the Playwright were likely working on their thirds.

Wait–the parody is coming from inside … the … office! The few remaining staffers at Brill’s Content are giggling about the new Web site Brillsdiscontent.com, which launched late last week after the struggling media magazine merged with the bleeding carcass of Powerful Media. Brillsdiscontent.com parodied the last Brill’s Content issue (a stern analysis of the troubles at CNN) with headlines like “Declining readership. A leadership vacuum. Massive layoffs. Plummeting morale. Less news, more fluff. The inside story of Brill Media’s sudden slide.”

Must have been the work of some punk with too much time on his or her hands, right? Some kid at Columbia Journalism, probably. Nope–Brillsdiscontent was the handiwork of Frances Duncan, who, at least until press time, was gainfully employed as the Web site director at … Brill’s Content.

Ms. Duncan, a plucky 23-year-old from Merrick, Long Island, said she began working for Brill’s while still a senior at Sarah Lawrence College. Several of her close work friends had been canned in the post-merger meltdown, she said. In protest, one of Ms. Duncan’s colleagues suggested doing a parody of the CNN cover, and on Friday Ms. Duncan decided, what the hell. She paid 40 bucks to register the domain name Brillsdiscontent.com and said the whole thing was simple to set up. “I sort of have the resources at my disposal,” Ms. Duncan pointed out.

Of course, she could have a little bit more time at her disposal, too, if Mr. Brill takes her “Less news, more fluff” parody the wrong way. Ms. Duncan admitted to being a “little nervous” about potential repercussions, but so far, so good. “I haven’t yet had any wrist slaps,” she said cheerfully, adding that “I’m up in the air about the future of my position.”

Prospective employers take note: Ms. Duncan lives in New York, hopes to stay in a position that is design-related and would be open to either Web or print media. And don’t be fooled: She’s a dedicated employee. “I’ve had a good time redesigning the site and putting a face on Brill’s Content for the Internet,” she said.

–Rebecca Traister