CASE: Well, it's a balance. I think you have to be able to attract the right people and run things as independent units, and at the same time on major key initiatives encourage people to cooperate.

Before Yahoo was even out there, in fact at the time Pathfinder started, we were trying to buy Yahoo, and it was $2 million for the company because there were two people in the company and we just bought Webcrawler which had one person in the company. We paid $1 million for Webcrawler and saw our valuation, was clearly established.

We called Jerry (Yang), well, two people, $2 million. I think if we said 5 million, I'm sure that we would have gotten the deal. We probably would have gotten it for 3, but we were stuck at 2.

So Yahoo was nowhere and Pathfinder, somehow it didn't really get the attention of the company and things just didn't get momentum. That's an example where we're saying we do need to figure out a way to move, sort of more of a tectonic shift, how do we make that move? But that's not in my mind at all inconsistent with this notion of entrepreneur. It's like looking at governments -- there are things that state governments do and there are things that federal governments do and there's always a little bit of a debate. What should happen at the county level versus the state level? There always is that tension. But there is a logic to why it makes sense to have these different kinds of approaches and certain things need to have almost a national crusade. You weren't going to get a man on the moon if Kentucky and Tennessee were trying to figure out how to make it happen.

Q: Jerry, how successful do you see Time Warner's efforts to be federal on the Internet? Was it going to work if you hadn't made this deal?

LEVIN: I think it would have gotten mixed results. I was trying to use traces of my own mind about internal takeover of CNN. To use Mike Milken terms, you're sitting out there, looking at Time Warner, what would you go after? Maybe the first thing you'd go after is CNN because it has real dot-com transferability. And I wrench it out of its current organization, and I slam Time in there and I make it fly and I don't want to hear anything about somebody coming in and taking it over. Then thinking about the reality, I think I probably could have pulled it off, but it would have contaminated the result. I would have done it -- it wasn't AOL or nothing -- but it wasn't a very satisfying alternative.

CASE: The flip side is going back to your earlier question. We did believe -- I believe that in the long run, that owning content or destination sites or channels or whatever metaphor you want to use is important. We didn't simply want to be an on-ramp. But all the things that people ended up eventually going to and bookmarking were things that we didn't have ownership in.

In the last four or five years we have done some of that with mixed results. Some of the brands have done quite well and others not so well. We found the last couple of years we were better buying interesting brands or strong passionate management teams and then taking them to the next step, ICQ being a good example; more recently, MapQuest is a good example. That's opposed to building them from scratch, which we tried to do with Entertainment Asylum and some things in the sports area.

So if we hadn't done this, although as I said, I believe this was the far and away best thing to do and I would have kept coming at it and hopefully eventually prevailed, we would have moved in that direction. The real debate would be, do you buy a number of web companies coming at this with kind of an Internet-centric focus, or is there some other quote-unquote media company that you look at to achieve the same objective?

But the strategic imperative I thought -- that we kind of reinvent the company. Every two or three years, we kind of reinvent the company, and it was time to be in content, although I think of it more as destination sites. We're not going to do it ourselves. The better thing would be to acquire five or 10 leaders in sports or music or what have you. Or some other media company. But when you look at the Internet, AOL stands head and shoulders above the pack. In the media companies, Time Warner stands head and shoulders above the pack, and you drop down significantly and there's Disney and then there's a handful of News Corps and NBC's and things like that that really are on a different kind of scale.

So AOL and Time Warner was the one that I knew was right and it was just a matter of getting it done. The real question was could we resolve all the complicated issues like valuation -- how do you get to a common ground of Internet valuations of this and media valuations of that?

And how do you make sure you get the best of both worlds in terms of the management teams? If we have any problem, it's an embarrassment of riches because between the two companies, we have an unbelievable cadre of terrific executives.

We need to keep them all, and keep their heads in the game, and even attract more to really capitalize on this opportunity.

LEVIN: When you think about it, just think about it for one second. Our mantra for awhile was, well, they, can't build what we have. They have to buy it. But we could build it. Now we're never going to know the answer to that, but at least that was a mindset for awhile, and I think that's very important because what does the AOL-Time Warner transaction mean?

Well, it certainly means something about respective valuations, like the Internet is real and media properties have real value and in that context it certainly means that. But what about this concept of a media company building itself into this space? Who is going to do it and can it be done?

So to me that's an interesting question. That's when somebody says, well, how do you put these two things together? I'd much rather accept that challenge than the other.

CASE: We both were underestimating the complexity of building what each other had and that's been true for 10 years. How hard is AOL? This little software, and e-mail, and bang, you're done.

How hard is a magazine? You hire an editor, and you know, get a printing press contract. Bang, you're done. Well, it's hard! (LAUGHTER)

Q: Where are the savings?

LEVIN: It's not the traditional savings, you know, when there's a merger and you get these cost efficiencies and you've cut out duplicated overheads. This is primarily supercharged revenues that have a much more efficient cost basis so that the incremental revenue stream, will be something that couldn't have been gotten by both companies.

Maybe 70 or 80 percent of that gets dropped from the bottom line. So this is a billion dollars of EBITDA, not a billion dollars of revenue, and it seems fairly simple to accomplish as we look at the incremental revenue streams that'll come on both sides of the company in the very first year of full operation.

Q: One of the things that struck us reading that release was just thinking back to the merger with Turner where the FTC pretty much imposed a period when you weren't able to have discussions like that and it lasted for about 15 months. Do you anticipate a similar response from the government that freezes all these kinds of discussions until you close the deal?

LEVIN: I guess we apply the standard here that commercial arrangements were good marketplace arrangements for both companies. Having said that, I think it's somewhat like a Warner Brothers movie being sold to a Turner network for the first network window. It's a marketplace number, but the fact that it's available and then it's done and the deal was struck, has a lot to do that there's a family interest in it.

I think first of all I believe we'll have a heavy contest between the FTC and the Justice Department as to who takes jurisdiction of this.

Once that takes place, then I think the legal requirement is that you can't really push things together but you can do a lot of things. During the Turner period, we started CNNSI, because it was a good thing to do and it would fly anyhow. We'll probably have more things that we know we can do together. Let's think InStyle, or a lot of thing that are happening in the supercharged People empire. I could say I'm impatient with the way it's going, so let's get AOL in there.