By Sara Kehaulani Goo and Thomas Heath
Washington Post Staff Writers
Friday, September 15, 2006
Ted Leonsis, a self-made technology entrepreneur who helped turn AOL into a multibillion-dollar business and later helped guide it through a recovery from the dot-com bust, said yesterday that he plans to step down at the end of the year from his day-to-day responsibilities at the company to focus on his sports, entertainment and philanthropic interests.
Leonsis, AOL's vice chairman, said he made the decision after conducting a "personal gut check." Over the past several years, he has juggled a number of growing commitments to his sports teams and movie projects as AOL was trying to overhaul its business strategy.
Leonsis, 50, is majority owner of the Washington Capitals, the area's professional hockey team, and a minority owner in the National Basketball Association's Washington Wizards. His holding company owns the Washington Mystics, the women's professional basketball team. Recently, he funded a documentary film project.
"I'm still going to have a really loud voice" in AOL, Leonsis said.
He is to maintain an office at the company's Dulles headquarters and remain vice chairman, but he will relinquish his title as president of the company's audience group, serving as more of a strategist.
"I'm still going to come in every day and if I want to leave at 5:30 to watch the drop of the puck, I will do that without guilt," he said. "I think I've earned that right."
In his current role, Leonsis oversees 2,500 employees, and AOL's effort to generate ad sales and develop new products such as music videos, TV shows and the Netscape Web site.
Next week, the company plans to announce some slight corporate reshuffling among the handful of managers who report to Leonsis, including Mike Kelly, head of ad sales; Jim Bankoff, head of programming; and Kevin Conroy, who heads AOL.com and other Web properties.
Leonsis was one of AOL's earliest leaders who, along with Steve Case and Jim Kimsey, built a business that helped Americans log onto the Internet, a utility they envisioned would become as integral to people's lives as the telephone and television.
In recent years, however, AOL has struggled as its revenue model, which relied on member subscriptions, became outdated. Many AOL members fled as they upgraded to high-speed Internet services and discovered they could get many of the same features, such as e-mail, free from competitors such as Yahoo Inc. and Microsoft Corp.
AOL chief executive Jonathan Miller said Leonsis played a key role in articulating a need for change at the company when it became clear that the old model was not working.
"Ted Leonsis helped build AOL, not once, but twice," he said. "He wanted us to get to that place. . . . We always discussed when we got to that place, he had a desire to not be in the day-to-day operation, but he would get us across the river."
Leonsis joined AOL in 1993 after it bought his online marketing firm Redgate Communications Corp. He quickly took on the role of corporate visionary, helping to keep the company focused on its mission and stave off competitors. In the early days, Leonsis helped to lead the company in its battle with Microsoft Corp., which sought to acquire AOL before it had built its own online presence with MSN.
Leonsis became a multimillionaire when AOL was acquired by Time Warner Inc. for $112 billion in 2001, and a bold-face local celebrity who has poured millions of dollars into area sports franchises and charities.
As AOL increased his net worth, which peaked at $1 billion when AOL's stock peaked but is now estimated at half that amount, Leonsis made public efforts to support local charities and served as a mentor last year to a young college student who he said reminded him of himself as a kid growing up in working-class Brooklyn.
For more than 20 years, Leonsis has kept a list of 101 things he wants to do before he dies. He has checked off buying an ownership in local sports teams and recruiting NBA star Michael Jordan back to the Wizards.
But he has not always been successful with his business ventures outside of AOL. He has also lost $100 million on the Capitals since he and other investors bought the team in 1999. Even though he was successful at wooing Jordan to the Wizards, resulting in four hot seasons for the team, Leonsis was helpless in stopping team owner Abe Pollin from ultimately firing Jordan.
Over the years, running so many ventures has become difficult and he said he has felt overstretched.
Wednesday, for example, was one of those days where he was torn between his commitment to AOL and his love for his outside ventures.
"I had nine meetings and none of them, you could honestly say, I couldn't attend," he said. "They're all necessary and I'm very committed to seeing them all through."
But he also wanted to attend the Washington Capitals news conference, at which the team was going to announce a new captain.
"It's probably a great time, with a great team in place, to say I'm just going to help AOL drive the agenda forward, just in a little different way," he said.
But he has also come to realize he can't do it all. "I've really become a student of happiness," he says, explaining that happiness derives from, among other things, volunteering, being part of a community and showing gratitude.
"He has certainly earned the right to now pull back from a full-time role at AOL, spread his wings, and get reacquainted with his entrepreneurial roots," company co-founder Case said in an e-mail.
In an interview this summer, Leonsis hinted that he might pursue a moviemaking career after the debut of his documentary based on Iris Chang's book, "The Rape of Nanking."
"I'm sure I'm going to learn a lot about this business," he said during a July interview at his AOL office. "If you look at the movies that are success stories, many of them are smaller films that tell a story."
He has started a film production company, hired more than two dozen employees and created a historical trove of information about the Nanking events, which he plans to give to his alma mater, Georgetown University. He plans to use his film company to pursue more documentaries with social significance.
"I would only [make films] on these kinds of subjects . . . if I find great stories," he said.
Many of Leonsis business partners and friends said they were not surprised by his decision to step back from AOL.
"Ted is a Renaissance man with many interests and this move will allow him to enjoy those more completely," said Raul Fernandez, a partner with Leonsis in Lincoln Holdings LLP, the company that has the ownership stake in the Wizards, Capitals and Mystics.
Former AOL executive Jack Davies said Leonsis told him of his plans in the past few days.
"He's very passionate about sports and about this film," Davies said. "This is the guy who has 101 things to do before he dies. One of them is to win an Academy Award."