STEVE CASE: I guess I would have come at it a different way, because I think it makes sense. I think I'd try to understand what was going on in his thinking, because it did strike me as strategically compelling, almost in the no-brainer category, and as good for Time Warner as I thought it was for AOL. So I wouldn't have taken a "no, not interested;" I would have somehow or other figured out a way to get a clearer sense of why it wouldn't be interesting, because it should be interesting.

When I called Jerry, I said it had to be a merger of equals. I thought he should be CEO. And we should figure out a way to integrate the management teams in a way that makes good sense, because there are terrific executives at both companies.

So I knew the valuation would be an issue, I knew the management would be an issue, and I tried to pre-empt that. For some reason, if it hadn't gone anywhere, as I say, I would have been surprised. I would have persevered. We would have continued to do what we are doing, which was executing a strategy that was working exceedingly well. We continue to grow all our brands quite aggressively and we look at other things, whether it be continued acquisitions in the Internet space, or looking at other media assets, because there really was no -- there was no close second.

Q: Was there an alternative plan that would maybe help you get on the cable systems?

CASE: Well, actually that was not a big driver. I felt that that this was moving in our direction and that I believed that, first of all, the consumer acceptance of broadband that we predicted two years ago was building, but it was not taking off like a rocket. @Home had a million or so subscribers, for example, and it was likely to pick up steam, but would likely be accelerated when AOL -- particularly AOL and others -- started marketing and upgrade its existing customers and that we are beginning to market DSL.

We are looking at some wireless investments, and we've been having discussions with most of the cable companies. And so, we thought that we would continue to build our audience. We had 10 million customers the last couple of years while this broadband debate was happening and they would be able to upgrade those customers and hopefully give consumers a choice of options.

And another big step was when AT&T agreed to some principles regarding open access. The FCC had recently said essentially one way or the other it's going to be open access. So our sense was that was moving in our direction. That was not a key driver of this. That was a factor, but not the key factor.

The real factor was we thought these two companies together would really allow us to do terrific things in terms of changing the way people get information and how they communicate, how they buy products, and how they learn things.

And the biggest issue for Time Warner was how to take all these wonderful brands and the trust that has been built over decades by Time and by Sports Illustrated and CNN and so forth and make it relevant in this new connected world, or more relevant to the connected world.

The big challenge for us was not just broadband access but broadband content. We didn't feel that it was enough simply to provide high-speed access to the things that people were already doing, although those would be nice and some people would pay for it. The real breakthrough would be when we reinvented the service to make it more of a multimedia service. That means having video assets and audio and things like that, so it was a little bit more like a TV experience with the personalization and things like that, not just that the Web pages popped in two seconds instead of 10 seconds.

So that was really the key driver, building this company that was financially strong, 40 billion in revenue and 10 billion in EBITDA in its first year in business, with tremendous brands and strong relationships with consumers, strong relationships with advertisers and a unique ability to bring these worlds together in a way that not only benefited the companies but also most of all benefited consumers.

Q: You talked yesterday about continued commitment to open access on cable. Could you flip that over to the content side and talk about your thoughts about the brands of Time Warner? Do you see CNN exclusively going to AOL and Internet space? Do you see Time?

CASE: No, no. Ultimately, the various CEOs ought to make those specific calls. But my expectation would be continuing to operate a lot of these different businesses as independent businesses and looking to ways to extend them by leveraging other capacities in the company, just as you've seen with CNN and Time Magazine, so there is some cross-promotion integration or creation of some new shows, things like that.

But you've got to continue to run them independently. I'm very sensitive to this, and Jerry and I spent a long time talking about how there really is a journalistic tradition here that is way, way beyond the kind of things we thought of at AOL. We thought of ourselves more as a packager, not as journalists per se. We had editors in one sense because they are deciding what to highlight on a screen, so there is some editorial judgement there, but the stories themselves are coming from CBS or Reuters or Bloomberg or AP. And some of the traditions, starting with Henry Luce, about not just church and state but also serving the public interest as well as the shareholders, are very important, and they resonated with me.

JERRY LEVIN: The unfortunate thing, in an open access, and this is leading rhetoric to a great extent, you just get back and look at what does history teach us about networks. No network can survive if it uses its captive programming as the way to succeed.

As a matter of fact, the maker of the programming is not going to succeed unless it's refreshed by serving live audiences. That's really the message.

Q: That's the model here --

LEVIN: That's the model that we've grown up with, and this now applies in spades in the Internet world because there is so much availability. Now that doesn't mean that you can't enrich the offering, but we have wrestled with this issue and kind of wrestled it to the ground over many years because it's also good business proposition.

CASE: And if you talk to some of the people at AOL, like -- for example, someone who is building interactive properties, in music, and Digital Cities, and ICQ. He'll tell you he's frustrated sometimes that the AOL Music Channel just can't basically point to Spinner and Winamp instead of pointing to a lot of different things. But this is a separate judgement by the people in charge of the AOL music channel about what to promote independent of the content brand for building it.

Of course, there is some desire to encourage synergies, but at the same time, you need to make sure there are independent decisions, and be one of the real things I respect about Jerry's leadership at Time Warner and a similar kind of model we try to put in place, is that you have empowered entrepreneurial executives here. If people feel like they're just part of this big centralized company where you can't do anything without 16 other people agreeing to it, I think that you aren't able to compete on Internet time.

You've got to have nimbleness. You've got to have empowered executives, particularly because, otherwise they'll run off an do some get-rich-quick.com kind of thing. So they have to feel like they're in charge and they have to feel like they're making a difference, they have to feel like they're empowered. We've tried to do that within AOL. Time Warner clearly has done that.

The executives here, Don Logan or Jeff Bewkes or many others, you can go down the list, are people who don't need the work, could get a lot of other jobs in a second and probably make more money in some quick IPO kind of Internet thing. They're here because they feel empowered and they feel that they're making a difference.