Time Warner, the world's biggest media company, agreed to pay $510 million to resolve U.S. investigations into whether its America Online (AOL) unit improperly booked advertising...

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Time Warner, the world’s biggest media company, agreed to pay $510 million to resolve U.S. investigations into whether its America Online (AOL) unit improperly booked advertising sales.

Time Warner will pay $210 million to end a U.S. Department of Justice investigation, Deputy U.S. Attorney General James Comey said yesterday at a Washington press conference. New York-based Time Warner said it reached a tentative agreement to pay $300 million to resolve a U.S. Securities and Exchange Commission probe.

Settling the investigations will free Time Warner Chief Executive Richard Parsons to focus on pursuing acquisitions and returning some of the company’s $6.9 billion in cash to shareholders.

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The probes began after AOL in 2001 bought Time Warner for $124 billion in a transaction that has sliced $104 billion from the company’s market value.

“Once cleared, they get rid of some uncertainty,” said Giri Cherukuri, senior trader at Oakbrook Investments of Lisle, Ill. “It’s a positive. They still have to deal with declining subscriber numbers at AOL. But they have lots of good properties.”

Oakbrook Investments owns Time Warner shares among its $1.2 billion in assets.

Time Warner has set aside $500 million to pay for settlements of the investigations. The Justice Department payment includes a $60 million penalty and $150 million for restitution that might be used for settling shareholder suits.

“While there are still challenges ahead, the steps we announced [yesterday] will help to remove a cloud that has been hanging over the company for some time now,” Parsons said in an e-mail to Time Warner employees. “We can now move forward with renewed confidence in the future.”

The proposal with the SEC also includes individual settlements for three executives including Chief Financial Officer Wayne Pace. The three won’t have to admit wrongdoing.

The government’s investigations into America Online will continue, Comey said.

“Watch this space,” he said.

The SEC staff accepted Time Warner’s $300 million proposal and it’s now subject to approval by the agency’s commissioners, the company said.

Prosecution of the Justice Department case will be deferred and America Online promised to cooperate with the probe, the agency said. Separately, Time Warner agreed to accept responsibility for the unit’s conduct and promised to cooperate.

The investigations covered transactions that occurred just as America Online was preparing to close its purchase of Time Warner, when a drop in revenue at the Internet company would have soured investors on the deal.