Ted Turner, Time Warner Inc.'s largest shareholder, is suffering seller's remorse over America Online Inc.'s pending purchase of the company, according to people close to the media mogul.
The legendary pioneer of 24-hour news, who became a Time Warner vice chairman after the sale of his cable empire in 1996, is upset not only about his reduced role in the new company but also by how it was orchestrated behind his back.
Turner was stripped of his day-to-day operating role in a management reorganization unveiled earlier this month. After overseeing the cable group that is Time Warner's fastest-growing division, Turner watched as it was handed over to Robert Pittman, chief operating officer of AOL and of the new company. Pittman will take charge of all distribution outlets, including cable, once the merger is finalized later this year.
The sudden changing of the guard shocked executives at Turner Broadcasting System, was overlooked by the media and could mark the end of the storied career of one of the most influential media figures of the 20th century.
It is unclear what if anything the volatile 61-year-old Turner--a loose cannon within the reserved Time Warner organization--can or will do to rock the boat. But some longtime associates are bracing for fireworks.
"I don't think this is over," said one Turner executive. "Ted could tell them, 'I'm going to rock this ship so hard that this deal falls apart.' You just don't want to underestimate or count him out."
At stake is one of the largest mergers in history--a $143-billion transaction that already makes Wall Street nervous because of the uncertain valuations of the novel pairing of old and new media. (AOL has a much larger market value than Time Warner, even though it earns a small fraction of the profit.)
A sensitive regulatory review took a turn for the worse three weeks ago when regulators questioned whether the combined AOL Time Warner could be trusted as a TV and Internet gatekeeper. That was after Time Warner outraged consumers by pulling the ABC network from its cable customers because of a contract dispute.
Turner refused to be interviewed for this article, but company officials verified that he had misgivings about his role.
AOL officials, however, say its chairman, Steve Case, is counting on Turner to play an active role as vice chairman and senior advisor. Key lieutenants say Turner is coming to terms with his emeritus status and had, long before the AOL merger announcement, retreated from day-to-day operations to pursue his passions for nuclear disarmament, land conservation and population control.
They say the recent changes, which weighed heavily on Turner's Atlanta headquarters, where people read and reread the news release in disbelief, is a natural progression of a media consolidation that has made entrepreneurs like Turner a dying breed.
"Did Ted want an operating role with the new company? Yes. Was he unhappy that he didn't get one? Yes," said Terence McGuirk, chairman of Turner Broadcasting. "Is he on board with the new structure and embracing the merger? Yes."
Others say Turner's title is irrelevant and that he rules through the force of his personality.
"Ted doesn't derive his power from an organizational chart," said Michael Wolf, a management consultant at Booz Allen Hamilton. "He's still a brilliant strategist and will continue to have a huge impact."
Turner's power is now enormous as Time Warner's largest shareholder and head of the fastest-growing division, which includes Home Box Office, and the operations he bought or built--CNN, TNT, TBS, the Cartoon Network and New Line Cinema, as well as the Atlanta Braves and Atlanta Hawks professional sports teams.
Although the merger with AOL will reduce his 10% stake to 4%, Turner will remain the largest individual shareholder--bigger than Case. Turner's wealth is estimated by Forbes magazine at $6.9 billion.
In January, Turner agreed to vote his shares in favor of the merger--and even demanded a recount of the Time Warner board vote because, as one source said, "he questioned their enthusiasm."
Turner Sounds Off to Cable Colleagues
But by May, his mood had changed. That was evident two weeks ago in New Orleans at the cable industry's annual convention, where the antics of the mogul known as "The Mouth From the South" and "Captain Outrageous" have become a celebrated ritual. At a banquet for cable power brokers, Turner vented his anger over agreeing to vote his shares for the acquisition only to be cut out of his job.
He told his cable cronies that the new structure was a breach of his contract, which assures that Turner Broadcasting, CNN, New Line Cinema and HBO report directly to him.
"He was disillusioned into thinking he would have a bigger role," said a longtime cable colleague. "Why did he sign over his shares without a clear understanding of his role?"