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By Alice LaPlante

STANFORD GRADUATE SCHOOL OF BUSINESS—Jeff Bewkes, who had a close up view of the AOL-Time Warner merger, believes openness—including honest internal discussion and being open to criticism—is critical to a successful merger.

“Many books are being written about why the AOL-Time Warner merger didn’t work,” said Jeff Bewkes, chairman of Time Warner’s Entertainment & Networks Group. “And my conclusion is that if you can’t have an honest conversation in your company about what you are doing, and invite everyone to come in and criticize and throw rocks, you will fail. It’s as simple as that.”

On May 25, in the last View from the Top speech for the 2003-04 academic year, Bewkes recalled his first talk in the speaker series seven years earlier. “I guess it’s a slightly different view from a slightly different top,” he said about his 2002 promotion from HBO chairman to his current role as one of two group chairmen at the Time Warner parent company. “When I came here the first time I was running HBO, and that really felt like the top,” Bewkes said, adding that his first year at the parent company, which back then was still called AOL Time Warner, “felt like the bottom. I hope it was.”

Blunt-spoken and witty, Bewkes, MBA ’77, described how he has always been puzzled that so many high-powered, highly educated business people spend their entire careers “managing up” to get to the top. “If you think about it, you realize how illogical that is,” he said. “They are working and working to get to a place where the one thing that they have been practicing won’t work any more.” What business leaders really need, said Bewkes, “are skills managing out and across as much as up and down.”

One of the biggest challenges facing Time Warner—which officially dropped “AOL” from its name in September 2003 as an acknowledgement that the once-touted merger had failed—continues to be how to manage successfully a company with five distinct divisions, each of which is a leader in its own very large media industry. With holdings including television, movie studios, music, books, and cable, Bewkes said that the big question is “to what extent should these five industries work together?”

This is a common challenge facing players in the highly consolidated media industry today, he said, and unlike some at Time Warner, Bewkes is dubious that there should be a tight coupling of companies from disparate media businesses just because they are owned by the same parent. NBC has been the most successful network over the past few years “and this is the one network that is not vertically integrated,” he said. “And keep in mind that Warner Brothers, which has a record number of series on air today [running across all six networks], is an unaligned television studio.”

Bewkes began his entertainment career at HBO in 1979, when only 10 percent of the country had cable. Yet he took a clerical job, the lowest position in the organization of 200 people, to get his foot in the door of the fledgling cable network. What attracted him enough to take a significant cut in pay and prestige was that HBO was on a mission to invent a new kind of television. “You know what HBO is now, but you have to remember that back then, we didn’t know,” he told the audience. “We had to make it up.”

Bewkes’ reign over HBO spanned a blossoming of the company from a simple purveyor of cable movies to an innovative award-winning programmer of original content. Bewkes presided over such hits as “Sex in the City,” which he nearly canceled in its first season; “The Sopranos,” which he wanted to rename; and award-winning miniseries such as Tom Hanks and Steven Spielberg’s “Band of Brothers” and Mike Nichols’ “Angels in America.” In his current position, he has responsibility for all the content of the Time Warner empire, including HBO, New Line Cinema, The WB Network, Turner Networks, Warner Bros., and Warner Music.

Responding to a question of how it feels to be relieved of hands-on management of HBO in exchange for his current group chairman responsibilities, Bewkes said, “It’s almost like returning to an earlier, mid-level stage of one’s career. I now need to make persuasive arguments, not operating decisions. It’s more strategic, from a management perspective, but more hands-off operationally. I’m still searching for a new maturity that has not yet arrived.”

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