Back in 1919 the U.S. Navy asked AT&T, United Fruit, Westinghouse and GE to form a radio communications company. RCA was born and grew under the unsentimental eye of David Sarnoff, who became General Sarnoff in WWII when he aided the war effort - how much, is a good question. Did he really earn his three stars?
In order to keep RCA’s control over AM radio Sarnoff was prepared to keep FM away from the public and did so for twenty years, driving his one time friend and collaborator (and employee) engineer, Edwin Armstrong, to despair and suicide in 1954. Sarnoff did try to buy Armstrong out in 1938 for a million dollars, but Armstrong believed as he owned the patents he had the right to set the terms of the deal. We can surmise he thought: why should RCA exploit his ideas, his technology, for the billions they came to be worth via RCA and NBC? To argue the other side, without RCA maybe FM would not have become as big as it did. I don’t believe that but you can argue it I guess.
In 1966 Armstrong’s widow won a judgement against RCA and others who used FM (without paying cent in royalties to Armstrong) for 10 million - 10 million + one suicide in 1966 as opposed to 1 million + his life in 1938, the victory is moot. And for the people who wanted RCA there in the first place 10 million any time was cheap for control over the airwaves and the cash cow the whole thing grew into.
Roll over radio with the post war growth in digital doodadery, cruise into in the early days of 1984 and watch a small company called Control Video under the wing of of Jim Kimsey, ex Viet vet, taking on a young travelling pizza-taster, Steve Case, as his junior, the road to controlling the ISP scene soon moving fast through the gears. In less than a decade Control Video mutates into AOL, taking on board (on to the Board) two ex Army Chiefs of Staff, Al Haig, and later, Colin Powell, becoming the biggest digital thing around by 2000.
In 1999 going 2000, as we know and don’t know, (the by now) AOL CEO Chairman, Steve Case, gets cosy and very private with Jerry Levin CEO of Time warner, cooking up a mega merger he started preparing mid 90s, the fallout of which for AOL (not him) was like someone slipping on the top of Everest, AOL ending up in a section of a division of AOL Time Warner (did it even have a telephone?). Soon AOL Time Warner is just Time Warner again, both CEOs leaving their respective posts, taking the blame with them.
They didn’t lose any money though, personally, either of them, the first cashing in his shares before, during and after the fiasco and the latter keeping his reasonably well-forecastable regeneration of Time share value + a consultancy deal worth millions. Not a perfect deal for a former CEO of a mega media concern perhaps but better than a poke in the eye with a burnt stick.
So what was that deal all about? Well like that other communications dance hit duo, Armstrong and Sarnoff, probably it was about, well, like it was in 1919… control. Imagine a scenario whereby AOL didn’t merge with Time and was still worth more than Time, Disney and all the rest of mega media corps put together. We might have a different Internet. Then again, I admit, we might not. There are many ways to skin a corporate cat and with Murdoch as one of the skinners you can count on clever knife work.
Many observers of course said at the time and still say that the first internet/digital/dot.com boom was as ephemeral as a soap bubble, but then many if not most of them wrote (still do, some) for the newspaper arms of the corporates who didn’t like AOL’s market dominance very much in the first place. But to be fair, let’s ask why would Steve Case sell his own company down the river and send himself into (eventual) corporate oblivion? Well for the answer to that big Q, I think, we have to go back to Control Video in 1984 (we could go back to MILNET and ARPANET and further) and ask why so many people from the armed services were involved in the set up of the ISP industry… as they were with the emergence of radio and RCA all beginning in 1919.
luminog