50 Warner, as he was paid to dor Or did he work for Steve Ross? After that, Nicholas seemed impelled, headlong, on a collision course. He asked Cravath, Swaine & Moore, the historic outside counsel of Time Inc., to examine the papers on the Toshiba-C. Itoh trans- action. (Liman' s firm, Paul, Weiss, Rifkind, Wharton & Garrison, had been engaged to work on this deal. Although at the time of the merger management indicated that the two law firms would share equally, Paul, Weiss has received at least three times as much post-merger business from Time Warner as Cravath has.) Nicho- las also talked to a Cravath senior partner, Samuel Butler, about his op- position to the deal, and his willing- ness, if necessary, to challenge Ross. Butler advised him, repeatedly, to make a list of the directors and count those whom he considered certain support- ers; Levin, despite whatever he had said to Nicholas about concurring with him, would clearly not be one. Liman came to see Nicholas and said that Ross wanted to bring the matter before the board. Nicholas re- plied that if Ross did so he would lose. That may have been mere bravado, but Nicholas insists today that he be- lieved at the time that if he laid before the directors his strategy for dealing with the balance sheet (something he had never done) it would be the more likely winner. Improbable though this seems-after all, it was because of Ross, the progenitor with the fecund imagination, that many of the Time directors had voted for the merger in the first place-matters never reached that point. Nicholas spoke to Dick Munro, who was on the board, and Munro called the Time Warner di- rector Donald Perkins (a former Time director), who, in turn, called Nicho- las; but Nicholas did not speak with any other directors. Instead, when Ross came to see him Nicholas suggested that they should try to resolve their differences, and not ask the board to do it for them, and he said he would attend a presentation on the deal, made to him by all those working on it. This meeting, which was held several days later, was very un- Warner-like: a carefully prepared, well-organized, ostensibly democratic process, after which all those involved, having heard the pros and cons, agreed that the deal should go forward- Nicholas included. Asked about his having thrown down the gauntlet only to retrieve it, Nicho- las said, "I couldn't be a yes-man. But I was trying, still, to be a team player. I thought that I would continue, do my best to contain the damage-and that time was on my side." N ICHOLAS had retreated, but on the Warner side the breach had become irreparable. One Time Warner executive has said of the presentation on the Toshiba-C. Itoh deal made to Nicholas, "That was when a bunch of us knew the world was going to change." Through the fall of 1991, a persistent, well-cultivated strain of anti- Nicholas sentiment spread through the upper levels of Time Warner. Nicho- las, increasingly isolated, and unaware of what was being marshalled against him, was the victim of the corporate structure in which he had earlier ac- quiesced-one consisting wholly of Warner loyalists, with Levin the single other Time person. Nicholas contin- ued to believe, as he had from the start, that he and Levin were a team, and refused to entertain any doubts on that score; when one executive from the Time side came to see him in the early fall and suggested that Levin might not be a trusty teammate, Nicholas is said to have dismissed the notion out of hand. While the ending was apparently known to Ross, Aboodi, Levin, and a handful of others, the rest of the script- the undoing of Nicholas-remained to be written. Some thought is said to have been given to dispatching him soon after the confrontation on the Toshiba-C. Itoh deal (Aboodi, ac- cording to one person, vigorously fa- vored Nicholas's immediate dismissal), but the moment was quickly seen to be wrong (a point about which Levin is said to have felt strongly): coming just after the summer's calamitous public- ity, and at a time when the stock price was languishing, a coup would only magnify the public image of a company run amok and, indeed, might jeopar- dize the Toshiba-C. Itoh transaction itself (which would not be announced JULY 6, 1992 until the end of October). In lieu of precipitate action, then, a plot was given time to develop. And Nicholas, being Nicholas, unwittingly played into the hands of what one person referred to as "the Steve forces" -those who were planning his demise. Nicholas's most self-damaging mo- ment occurred at the Time Warner annual meeting, in late September. For Ross, especially, the meeting was gruelling; he was delivering a care- fully prepared defense of the seventy- eight-million-dollar payout he had received, and was doing so against a backdrop of pickets, fired employees, and union spokesmen, all protesting Time Warner layoffs of six hundred and five employees from the magazine division, some of which had been announced just the week before. Into this melee came Nicholas and, in re- sponse to a question about further layoffs at the publishing division, he said, in his signature, overtough way, that cost control "must be a way of life for any business that wishes to survive in the global marketplace." Old Warner hands were aghast, feeling that this was a time for palliatives rather than more bitter pills, and knowing that Nicholas's response was one that (however true it was) Ross would deplore; he and Nicholas, standing at their respective lecterns, had never seemed more flagrantly out of synch. And these executives, long accustomed to think- ing of annual meetings at Warner as large, celebratory family gatherings, also blamed Nicholas for having robbed them of their party by timing the layoffs so poorly. ("Where's our love-fest?" one demanded, disconsolately.) Actu- ally, the timing was a decision that, according to Nicholas, Levin had made and Nicholas had concurred in; the two had agreed that the announcement of the layoffs, originally set for Octo- ber 1st, had to be made earlier, so that management could not be accused, later, of having evaded the issue at the annual meeting. An attempt that Nicholas had made, that July, to find a capital-raising al- ternative to the strategic alliance was now also transmuted into useful pro- paganda. He had wanted to create a joint venture combining Warner Music with MCA Music; since Warner Music was much larger, Time Warner, in the capitalization of this entity, would receive three to four billion dollars in cash. According to Nicholas, Ross had