SAN FRANCISCO (04/04/2000) - Mounting tensions at Entertaindom, Time Warner's entertainment site, have resulted in the departure of its three top execs - President Jim Moloshok, executive VP Jim Banister and Jeff Weiner, VP of planning, development and administration. With plans for a spinoff shuttled, Entertaindom employees saw their options packages converted into TW corporate stock - a development that left top execs none too pleased.
Sources close to the company confirmed that Moloshok, Banister and Weiner have not officially resigned, but have been missing in action for weeks. Moloshok removed decorations and photographs from the walls of his office four weeks ago, one source noted. Morale at Entertaindom has hit an all-time low, and more staff departures are imminent.
The blowout at Entertaindom comes as no surprise - since the America Online-Time Warner merger, the site's fate has been murky. Today, it is no clearer. Entertaindom launched in December as an entertainment portal featuring content from Time Warner (Friends, Bugs Bunny, etc.), original animations (Stan Lee's 7th Portal, the God and Devil Show) and a community called Acme City. When it finally launched a full year after it was announced, the site was unable to shed its Bugs Bunny ties and was dissed almost universally by online entertainment insiders as being "uncool."
That said, it was one of the first sites to feature and promote an Internet-only animated series, the God and Devil show, licensed from San Francisco-based animation house Mondo Media. It added Stan Lee's 7th Portal, and a cartoon based on fictional adventures of the rock band Kiss. And the numbers weren't too shabby, either. Entertaindom got 3.2 million unique visitors in February, according to Media Metrix. The company's closest competitor in online entertainment sites, AtomFilms, got 254,000 unique visitors during the same period. Then TimeWarner merged with AOL.
What should have been a great boost for Entertaindom (after all, the merger inspired talk about content and convergence) became its death knell. The site originally had been planned as a spinoff, with execs such as Moloshok, Banister and Weiner receiving healthy options packages. "You think Moloshok would have stayed there if it wasn't for the options?" says one insider. "He and Banister could have had their pick of any entertainment startups." The options, as originally reported by News.com, and confirmed by Entertaindom staffers, were based on Entertaindom's original valuation ($200 million) with a strike price of $7.50.
After the AOL merger, however, plans to spin off Entertaindom were stopped. A management restructuring put Entertaindom firmly back into the Time Warner boat. As reported in The Standard, Kevin Tsujihara, formerly Time Warner's senior VP of corporate strategic planning and development, has been promoted to executive VP of new media and reports to TW Chairman Barry Meyer. Moloshok, who once reported to Meyer, now reports to Tsujihara.
This morning, Tsujihara led a meeting of Entertaindom staffers to discuss the site's fate. When asked what happened with the Jims and Weiner, Tsujihara, according to a source inside the company, said he "was hoping to have something to announce this morning" about the executives but didn't have any news.
Tsujihara added that, in their absense, any questions should be directed to him. Because Entertaindom is not going to be spun off, employee options have been converted into Time Warner stock, of which a portion is of restricted status based on an unenviable 5-year vesting period. Meanwhile, according to another source, the Jims have already gone on to fulfill their pre-IPO startup dreams.
And Entertaindom's future? Expect many other departures and many interested takers. "I haven't seen any resumes from Entertaindom people," says Dave Goldberg, CEO of Santa Monica-based music site Launch.com, "but we'd be happy to talk to them." Entertaindom is now being folded back into WBOnline, its original birthplace. WBOnline is now headed by Tsujihara, who was unavailable for comment. Before Entertaindom launched, WBOnline was primarily a promotional site for Warner Bros.' Properties, and it housed sites for Friends and Rosie O'Donnell, etc.
After Entertaindom went live and before Tsujihara was promoted, the site lay dormant, run by a skeleton crew, with many dead links. Now the dead links have been fixed and WBOnline is getting juiced again. A recent press release spells out the future: "Warner Bros. Online (warnerbros.com) is positioned to become the ultimate Internet entertainment destination, offering the best of what the best has to offer." So Entertaindom, if not a poor cousin, might well become a memory - and soon.