Steve Case, a co-founder of AOL and one of the key architects of the disastrous AOL-Time Warner deal, said today that he has resigned from Time Warner Inc.'s board of directors.
NEW YORK – Steve Case, a co-founder of AOL and one of the key architects of the disastrous AOL-Time Warner deal, said today that he has resigned from Time Warner Inc.’s board of directors.
Case had relinquished the role of chairman two years ago, but remained on the media conglomerate’s board of directors, despite the opposition of shareholders angered by the fallout of AOL’s purchase of Time Warner at the height of the Internet bubble in 2000.
Other key executives involved in the deal had already left the company in a management purge, including former Time Warner CEO Gerald Levin and Bob Pittman, a former AOL executive.
Time Warner has agreed to pay a combined $510 million to settle shareholder lawsuits and regulatory charges that AOL fraudulently inflated its online advertising revenues and subscriber counts. The company also took massive write-downs and removed AOL from the beginning of its name.
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This April, Case announced he had launched an investment company called Revolution LLC that would make investments in health care, resorts and wellness programming.
The investments include Wisdom Media Group, a company that makes programs on yoga, acupuncture and shiatsu; a high-end spa outside Tucson, Ariz., called Miraval and Exclusive Resorts, a company that markets luxury vacation rentals.
Time Warner shares rose 19 cents, or 1.1 percent, to $17.94 in morning trading on the New York Stock Exchange.
Case said in a statement that he was leaving to focus on growing his new investment company and to avoid any potential conflicts of interest. He also said he was pleased to see a “renewed focus” on AOL at Time Warner.
Ironically, after several years of being seen as an albatross around Time Warner’s neck because of its steadily declining dial-up subscriber base, in recent months AOL has become a coveted acquisition target among major Internet companies such as Yahoo Inc. and Google Inc. as it taps into the boom in online advertising.
Time Warner has been under pressure from activist shareholder Carl Icahn and a group of allied investors to take drastic measures to boost its share price, which is still about 75 percent below the levels reached before the AOL-Time Warner deal was announced in early 2000.
Time Warner has disagreed with Icahn’s proposals, which include completely spinning off its cable TV subsidiary and stepping up a share repurchase program. Icahn has also criticized the fact that several directors who approved the AOL-Time Warner deal remain on Time Warner’s board.
Case noted that even after his departure he would remain one of the largest individual shareholders in the company and would remain “actively engaged” as future strategies for AOL are considered.
According to SEC filings, Case owns about 0.3 percent of the company’s shares, about half the size of the stake owned by CNN founder and Time Warner board member Ted Turner.
In a statement, Time Warner CEO Dick Parsons thanked Case for his years of service to the company. “We’ll look forward to his wise counsel as the company continues to move forward. He will be missed,” Parsons said.